I. TRIBUNAL
23 Commissioner of Service Tax vs. Intas Pharmaceuticals [2021-TIOL-367-CESTAT-Mum] Date of order: 25th June, 2021
Notice pay received from the employee being in the nature of compensation for premature termination of service not liable to service tax
FACTS
The contractual agreement between the company and its employees is that the employee should not leave the employment before the prescribed period. In case of breach of this condition, he would be required to pay one month’s salary which is penal in nature. A show cause notice is issued demanding service tax on the amounts received by the company from its employees alleging toleration of act of breach of contract taxable as a declared service u/s 66E(e) of the Finance Act, 1994.
HELD
The Tribunal relied on the decision of the Madras High Court in the case of GE T&D India Pvt. Ltd. [2020] (35) GSTL 89 (Mad) where the Court categorically holds that the definition in clause (e) of section 66E is not attracted as the employer has not ‘tolerated’ any act of the employee but has permitted a sudden exit upon being compensated by the employee in this regard. Notice pay, in lieu of sudden termination, does not give rise to the rendition of service either by the employer or the employee. Accordingly, the demand was set aside.
24 M/s PVR Ltd. vs. Commissioner of Service Tax [2021-TIOL-368-CESTAT-Del] Date of order: 5th July, 2021
Booking of online tickets and charge of convenience fees is in the nature of E-commerce transaction not taxable under OIDAR services
FACTS
The issue involved in these two appeals relates to taxability of ‘convenience fee’ charged by the appellant to its customers for online booking of movie tickets under the category of ‘online information and database access retrieval system (OIDAR)’ defined u/s 65(75) of the Finance Act and taxable u/s 65(105)(zh) of the Finance Act.
HELD
The Tribunal noted that any person who visits the website of the appellant to seek information about the show timings or other information does not have to make any payment and it is only when a ticket is booked online that convenience fee is required to be paid by the user. The substance of the transaction is, therefore, to book a ticket online and thereby engage in E-commerce. Therefore, it cannot be said that convenience fee is charged for any access / retrieval of information or database as contemplated under OIDAR service. It is also noted that the Board Circular dated 9th July, 2001 also clarifies that E-commerce transactions do not fall within the ambit of OIDAR service. Thus, service tax under the category of OIDAR cannot be levied upon a user merely because he receives a code for getting a printout of the ticket from the cinema hall.
