{"id":5028,"date":"2025-07-24T15:41:53","date_gmt":"2025-07-24T10:11:53","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=5028"},"modified":"2025-07-24T15:41:53","modified_gmt":"2025-07-24T10:11:53","slug":"no-service-tax-on-notice-pay-recovery-or-mutual-fund-investment-cestat","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/no-service-tax-on-notice-pay-recovery-or-mutual-fund-investment-cestat","title":{"rendered":"No Service Tax on Notice Pay Recovery or Mutual Fund Investment | CESTAT"},"content":{"rendered":"<pre><strong>Case Details: <a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/excise-service-tax\/101010000000401207\/demand-unsustainable-as-mutual-fund-investment-is-not-exempted-servicegoods-sale-cestat\">Instakart Services Pvt. Ltd. Versus Commissioner of Central Tax, Bengaluru (2025) 32 Centax 185 (Tri.-Bang)<\/a><\/strong><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>Dr. D.M. Misra<\/strong>, Member (J) &amp; <strong>Mrs R. Bhagya Devi<\/strong>, Member (T)<\/li>\n<li><strong>S\/Shri Tarun Gulati<\/strong>, Sr. Adv. with <strong>Kishore Kunal K.K.<\/strong>, Adv., for the Appellant.<\/li>\n<li><strong>Shri K. Vishwanatha<\/strong>, Superintendent, Authorised Representative, for the Respondent.<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>The assessee was engaged in providing taxable services and invested in mutual funds. During the audit, the department observed that the assessee had not discharged service tax liability on the amount received from the employees for the waiver of the notice period on leaving the employment. The department issued a show cause notice demanding service tax on such amount. On adjudication, the demand was confirmed with interest and penalty. Aggrieved by the order, the assessee preferred an appeal to the South Zonal Bench of the CESTAT.<\/p>\n<h2><em>CESTAT Held<\/em><\/h2>\n<p>The Tribunal held that the assessee was only rendering taxable services; therefore, the Rule 6(1) of the CENVAT Credit Rules, 2004 will not apply. The assessee was investing its surplus in mutual funds and not trading the same as securities. The investment in mutual funds by the assessee cannot be considered as an activity involving exempted services nor sale\/trading of exempted goods. Thus, demand for service tax on the amount of charges recovered by the assessee from its employees who had not served the notice period in terms of the employment contract was not sustainable.<\/p>\n<h2><em>List of Cases Cited<\/em><\/h2>\n<ul>\n<li>Ace Creative Learning (P.) Ltd. v. Commissioner of Central Tax \u2014 [2021] 126 taxmann.com 215 (Bangalore &#8211; CESTAT) \u2014 Referred [Para 3.1]<\/li>\n<li>Amit Metaliks Ltd. v. Commissioner of Central GST \u2014 [2021] 127 taxmann.com 248 (Kolkata &#8211; CESTAT) \u2014 Referred [Para 3.2]<\/li>\n<li>Balaji Medical and Diagnostic Research Centre v. Principal Commissioner, Central GST (East Delhi) \u2014 2023 (12) TMI 748 \u2014 Referred [Para 3.2]<\/li>\n<li>Commissioner of CGST and Central Excise v. Edelweiss Financial Services Ltd. \u2014 [2023] 149 taxmann.com 76 (SC) \u2014 Referred [Para 3.1]<\/li>\n<li>GE T &amp; D India Ltd. v. Deputy CCE \u2014 [2020] 119 taxmann.com 55 (Madras) \u2014 Referred [Para 3.2]<\/li>\n<li>Indiabulls Securities Ltd. v. CCE \u2014 2018 (1) TMI 1087 \u2014 Referred [Para 3.1]<\/li>\n<li>Madhya Pradesh Poorva Kshetra Vidyut Vitran Co. Ltd. v. Principal Commissioner CGST and Central Excise, Bhopal \u2014 [2021] 126 taxmann.com 181 (New Delhi &#8211; CESTAT) \u2014 Referred [Para 3.2]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2017%20(48)%20S.T.R.%2069%20(Tri.-Bom)&amp;itemType=AP\">Mormugao Port Trust v. CCE &amp; ST, Goa<\/a> \u2014 2017 (48) S.T.R. 69 (Tri.-Bom) \u2014 Referred [Para 3.1]<\/li>\n<li>Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. v. Commissioner of Central GST \u2014 [2022] 135 taxmann.com 6 (New Delhi &#8211; CESTAT) \u2014 Referred [Para 3.2]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2020%20(37)%20G.S.T.L.%20236%20(Tri.-Del)&amp;itemType=AP\">Ruchi Infrastructure Ltd. v. CCE &amp; ST, Indore<\/a> \u2014 2020 (37) G.S.T.L. 236 (Tri.-Del) \u2014 Referred [Para 3.1]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2021%20(55)%20G.S.T.L.%20549%20(Tri.-Del)&amp;itemType=AP\">South Eastern Coalfields Ltd. v. CCE and Service tax<\/a> \u2014 2021 (55) G.S.T.L. 549 (Tri.-Del) \u2014 Referred [Para 3.2]<\/li>\n<li>Space Matrix Design Consultants (P.) Ltd. v. Commissioner of Central Tax, Bangalore North \u2014 [2021] 127 taxmann.com 51 (Bangalore &#8211; CESTAT) \u2014 Referred [Para 3.1]<\/li>\n<li>United Racing and Blood Stock Breeders Ltd. v. Commissioner of Central Tax, Bangalore \u2014 2023 (5) TMI 84 \u2014 Referred [Para 3.1]<\/li>\n<li>XL Health Corporation India (P.) Ltd. v. Commissioner of Central Tax \u2014 [2022] 138 taxmann.com 437 (Bangalore &#8211; CESTAT) \u2014 Referred [Para 3.2]<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: Instakart Services Pvt. Ltd. Versus Commissioner of Central Tax, Bengaluru&hellip;<\/p>\n","protected":false},"author":8,"featured_media":5043,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,51,63],"tags":[],"class_list":["post-5028","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-excise-service-tax","category-news-excise-service-tax","category-est-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>No Service Tax on Notice Pay Recovery or Mutual Fund Investment | CESTAT<\/title>\n<meta name=\"description\" content=\"CESTAT rules that mutual fund investment isn\u2019t an exempted service; sets aside service tax demand on notice pay recovery under CENVAT Credit Rules, 2004.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.centaxonline.com\/blog\/no-service-tax-on-notice-pay-recovery-or-mutual-fund-investment-cestat\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"No Service Tax on Notice Pay Recovery or Mutual Fund Investment | CESTAT\" \/>\n<meta property=\"og:description\" content=\"CESTAT rules that mutual fund investment isn\u2019t an exempted service; 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