Page 187 - GSTL_2nd April 2020_Vol 35_Part 1

2020 ] GE T & D INDIA LIMITED v. DEPUTY COMMISSIONER OF C. EX., CHENNAI 89
2020 (35) G.S.T.L. 89 (Mad.)

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dr. Anita Sumanth, J.
GE T & D INDIA LIMITED
Versus
DEPUTY COMMISSIONER OF C. EX., CHENNAI
W.P. Nos. 35728-35734 of 2016 and W.M.P. Nos. 30704-30710 of 2016,
decided on 7-11-2019
Employment Termination Facilitation service - Employees quitting
employment without serving during notice period - Amount received from
them by the employer equal to salary for the said period not taxable under Sec-
tion 66E(e) of Finance Act, 1994 as employer not rendered any taxable service
or tolerated any act of the employee but has merely facilitated sudden exit of
employees by imposing cost upon them for such an act - Notice pay in lieu of
sudden termination does not give rise to rendition of service either by em-
ployer or by employees - Section 65 of Finance Act, 1994. [paras 10, 11, 12]
Writ jurisdiction invocable when issue related to interpretation of
statutory provisions though alternate remedy available against the impugned
order - Article 226 of Constitution of India. [para 13]
Petitions allowed
REPRESENTED BY : Shri Joseph Prabhakar, for the Petitioner.
Shri A.P. Srinivas, Senior Standing Counsel, for the
Respondent.
[Order (Common)]. - The petitioner is a dealer assessed to service tax by
the respondent. The terms of employment of the petitioner company include a
stipulation for a notice period prior to quitting from employment, ranging from
two to three months. An option is provided to the employees to the effect that if
they are not in a position to stay and serve out the notice period, then in lieu of
the same, the employee will be required to pay the equivalent pay of salary for
the period for which notice was not served.
2. Thus, in a case where an employee wishes to quit, it is incumbent
upon the employee to put the employer to notice in advance of a stipulated peri-
od to enable recruitment of a new employee and smooth transition of the work
carried on by the employee, who proposes to quit. It also facilitates a situation
where the employee may desire immediate quitting by enabling him to do so,
however, also ensuring that some compensation is provided to the employer by
virtue of the sudden and unexpected termination of duty.
3. The petitioner in this case had received certain amounts in lieu of no-
tice period from outgoing employees. The Assessing Officer was of the view that
this amount would attract service tax since the petitioner is deemed to have facil-
itated the termination of employment and thus a category of service entitled and
described as ‘facilitation of termination of employment’ was carved out by the
Assessing Officer.
4. Seven show cause notices were issued relating to different units of
the petitioner all over the country. Despite objections raised, the proposals for

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