Resource Inputs Limited

Employment relations in India are governed by Labour Laws such as Industrial Disputes Act, Industrial Employment (Standing Orders) Act, Trade Union Act and also Constitution of India and collective and individual contracts and judicial precedents. Most of the labour and employment laws primarily apply to ‘workman’ as defined in the Industrial Disputes Act. There are around 165 Labour Legislations in India of which 55 central legislations while 110 are state enacted legislations. Employees who are not workman as per the definition of workman in the Industrial Disputes Act, the employer-employee relations are governed by contract of employment. Generally a written contract with an employee is in the form of letter of appointment. These employees are governed by The Indian Contract Act 1872 and Specific Relief Act.

The Labour Laws with a view to protect the employment and prevent exploitation brought-in certain restrictions under some circumstances in different Labour Laws besides defining the procedures in dealing with acts of misconducts, if any, committed by the workmen. The Model Standing Orders have defined the acts which constitute misconduct and the punishments that can be imposed upon workmen on finding him guilty by following the defined procedure. The Industrial Disputes Act has imposed restrictions even after following the procedures laid down in Standing Order under certain special circumstances and protected workmen.

In this paper an attempt is made to analyze the provision under Employee State Insurance Act, Maternity Benefit Act and Industrial Disputes Act with regard to the restrictions imposed on the employer on dismissal or discharge of a workman.

ESI Act

The employees with gross monthly wage of Rs. 15,000/- and below, working in factories (other than seasonal factories) and shops and establishments with ten or more employees in the notified areas are covered under Employee State Insurance Act. The educational institutions, hospitals and construction workers are also covered under the Act. Employees who are not covered under ESI Act are covered under Employee Compensation Act and Maternity Benefit Act. Some of the benefits provided under the ESI Act are ‘Sickness Benefit’ ‘Maternity Benefit’ and ‘Disablement benefit’.

In accordance with the Section 73 of the ESI Act employer shall not dismiss, discharge or reduce or otherwise punish an employee during the period when he / she is in receipt of sickness benefit or maternity benefit and also during the period in receipt of disablement benefit for temporary disablement or is under medical treatment for sickness or is absent from work as a result of certified illness arising out of pregnancy or confinement. During the said period no notice of dismissal or discharge or reduction shall be served on an employee. Thus there is statutory embargo on the employer not to dismiss or punish an employee during the period of above mentioned circumstances.

The Bombay High Court in the matter of Divisional Controller, Maharastra State RTC Vs SherkhanChhotekhan [2004 LLR 600] held that the dismissal of an employee, as covered under the ESI Act during receipt of his sickness benefit, would be void and the employee will be entitled to reinstatement with other benefits.

The Bombay HC in the matter of RamchandraSitaramKale(deceased) Vs Maharashra State Road Transport Corporation [2009 (120) FLR 100] held that in case where a notice of dismissal or discharge or reduction is given during the specified period of illness, the same shall remain in abeyance because the same is not valid nor the same can be made operative during that period.

The Karnataka High Court in the matter between Guest Keen Williams Ltd Vs PO Labour Court held that the bar in section 73 of the Act only requires the employer not to dismiss or terminate during the period of sickness benefit period. However, in the case of voluntary abandonment, this will not be applicable.

If any employer contravenes the section 73, it would not only render the dismissal or discharge invalid but also expose the management itself to the peril of prosecution under section 85 of the Act.

The Kerala High Court in the matter of Kerala State Co-Operative Coir Marketing Federation Limited VsSreekumar [2002, III LLJ 101] examined the question whether the ESI Court is competent to consider the validity of an order of dismissal of an employee on the ground of violation of section 73 and held that the ESI Court is not competent and it can only take penal action against the employer, if proved, violation of section 73.

The workmen has to take up his claim for reinstatement only under Industrial Disputes Act and not under ESI Act.

Maternity Benefit Act

In accordance with the section 12 of Maternity Benefit Act no employer shall dismiss or discharge a women employee who is absent from duties under the provisions of this act and also any time during pregnancy. Women employee will be entitled to maternity benefit under Act on working a minimum of 80 days in the twelve months preceding the date of expected delivery. Women employees engaged directly or through any agency or contractor is also covered under the Act.

The Supreme Court in the matter of Municipal Corporation of Delhi Vs Female Workers (Muster Roll) [AIR 2000 SC 1274] held that the provisions of the Maternity Benefit Act entitle maternity leave even to women engaged on casual basis or on muster roll basis on daily wages and not only those in regular employment.

Supreme Court in the matter of NeeraMathurVs LIC of India ruled in favour of the pregnant employees. In the instant case the employee while on probation she applied for maternity leave and the company discharged her from service on reasons of deliberately withheld the fact of being pregnant at the time of filling up a declaration form prior to being appointed. The court ordered reinstatement.

Industrial Disputes Act

Section 33 of the Industrial Disputes Act imposes restrictions and a temporary ban on the employer’s right to alter the conditions of service of a workman or to punish him by way of discharge or dismissal while an industrial dispute is pending before conciliation authority or Labour Court or Industrial Tribunal or Arbitration. The employer has a responsibility to seek prior approval of the authority before whom the disputes is pending for effecting any change in conditions of service or

for discharging or dismissing the workman in respect of any matter or misconduct that is connected with the dispute u/s. 33(1) and in case of misconduct not connected with the dispute, the employer can pass an order of discharge ordismissal, but he should seek approval subsequently u/s. 33(2)(b) and also make payment of wages for one month.

Thus for imposing a penalty of dismissal or discharge on a workmen for his acts of misconduct which is not connected with the dispute pending before the authority after conducting enquiry and establishing the misconduct in according with the Standing Orders of the industrial establishment, the employer is required to make an application for approval after passing the orders under Sec 33(2)(b) of the Act which is a major constraint to the employer in addition to payment of one month wages to a workmen who has committed misconduct.

The employer is required to do all the three acts simultaneously, that is the discharge or dismissal of the workman, making payment of one month wages and making application for approval for discharge or dismissal of the workman. The Supreme Court in the matter of Straw Board Manufacturing Co Ltd VsGobind, [1962 I LLJ 420] held that employer shall ensure that all the three actions shall be simultaneous and shall form part of the same transaction failing which the application runs the risk of being rejected.

The Supreme Court in the matter of Tata Steel VsModak [1966 AIR 380] and Jaipur ZillaSahakariBhoomiVikas Bank Ltd Vs. Ram Gopal Sharma [2002 (92) FLR 667] held that in case of misconduct not connected with a pending dispute u/s 33(2), the employer may first discharge or dismiss the workman after domestic enquiry and then can seek approval of the concerned industrial court. If the approval is granted, the discharge or dismissal shall take effect from the date of the order. In case of refusal of approval application, then the workman is deemed to be in continuous service.

However the jurisdiction of the Tribunal on the application made for approval after dismissal or discharge of a workmen for a misconduct not connected with the dispute before it is limited to:

• Whether a proper domestic enquiry was conducted in accordance with the Standing Orders by observing the principles of natural justice.
• Whether a prima facie case for dismissal based on the evidence on record is made out
• Whether the employer had arrived at bona fide conclusion that the workman was guilty of the misconduct.
• Whether the dismissal or discharge was not intended to victimize the workman.

and the Tribunal does not sit as a Court of Appeal re-appreciating the evidence and it only examine the proceedings and finding of the enquiry to ascertain whether prima facie case had been made out or not. In the matter of discharge or dismissal connected with the dispute pending before the Tribunal or in the Conciliation proceedings, the Supreme Court in the matter of Lord Krishna Textile Mills Vs its workmen [1961 AIR 860] held that in case of misconduct connected with pending dispute, u/s 33(1), the discharge or dismissal shall take effect only on the approval granted by the concerned Industrial Court. The Supreme Court in the matter of Ram LakhanVs Presiding Officer [2001(I) LLJ 449] also held that during the pendency of management’s application for permission to dismiss the workman, the company shall pay the subsistence allowance if placed under suspension.

The Act imposed restrictions on discharge or dismissal of a protected workman during pendency of an industrial dispute. The Karnataka High Court in the matter of Bagalkot Cement Co Vs The Management of Kanoria Industrial Ltd [2006 LLR 674] held that dismissal of protected workman, without seeking permission will be violation of section 33(3) of the ID Act.

All the registered trade union office bearers will not become protected workmen automatically. Only such of those office bearers whose names have been notified by the registered trade union on or before 30th April every year and approved by the Management will alone fall under the category of protected workman. The total number of protected workman shall be restricted to one percent of the total number of workman subject to a minimum of five and maximum of one hundred. If the number of registered trade unions are more than one, the protected workman shall be based on the membership of the each registered trade union. The period of recognition of the workman as a protected workman will be valid for twelve months only.

Thus it is essential to the employers to understand the restrictions imposed on discharge or dismissal by different legislations under certain special circumstances before taking a decision even in disciplinary matters.

This article is contributed by Partners of SBS and Company LLP – Chartered Accountant Company You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

What are digital signatures?

Digital Signatures are based on Public Key Technology that uses asymmetric cryptography. Each person's identity is related to a key pair - a private key and a public key. These keys are nothing but mathematical codes generated on your computer.

Overview

The arrival of digital signatures, and their legalization by Governments all over the world, has marked a new revolution in the world of electronic transactions. Digital Signatures will make business transactions over the Internet easier, and more reliable for businesses and consumers. Paper documents are steadily replaced by electronic documents and as other digital assets such as messages, transactions, digital content, and software proliferate across every type of organization, new types of controls are needed. Electronic versions of traditional signatures and watermarks provide some benefits but lack the security properties to play a role in compliance reporting and support legal challenges. As organizations adopt a more service oriented approach to business processes and integrate with cloud-based resources, they need provably reliable ways to validate the authenticity and integrity of these electronic items; more specifically, they need to attest that these items have not been changed maliciously since they were created. Furthermore, when it comes to digital transactions, organizations need to establish a means of non-repudiation—the ability to hold parties accountable for the transactions they execute. In the end, a legal contract executed online, for example, should be as ironclad as one executed in person before witnesses. To meet these goals, organizations use digital signatures.

Read more: Digital Signature Decrypted - E Lock

The Foreign Contribution (Regulation) Act, 2010 (for brevity ‘FC(R)A’) has been introduced with an objective to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit the acceptance and utilization of foreign contribution or foreign hospitality for activities detrimental to the national interest. FC(R)A is administered by Ministry of Home Affairs (for brevity ‘MHA’) under Government of India (for brevity ‘GoI’). The FC(R)A has replaced the earlier Foreign Contribution (Regulation) Act, 1976 and is effective from 1st May, 2011

The recent amendments carried on to the FC(R)A clearly suggest that MHA is closely scrutinizing the receipts and utilization of foreign contributions particularly which are detrimental to national interest. Further, as per the information available on www.fcraonline.nic.in a total of 14,000 entities registration has been cancelled by MHA for violating the provisions of FC(R)A. Hence, in light of the tough regulations, it is very important for individuals, associations or companies who are in receipt of foreign contribution to be updated with the changes made to FC(R)A, more specifically areas pertaining to the registrations and filing of returns.

The aim of this article is to dwell upon the registration (initial and renewal) and filing requirements under FC(R)A so the trade can be abreast of the procedures.

Registration & Related Matters:

Section 11 to Section 16 of FC(R)A read with Rules made thereunder deals with registration and related matters under the Act.

Persons required to obtain registration under FC(R)A:

Every person having a definite cultural, economic, educational, religious or social programme shall not accept foreign contribution unless such person is registered with central government. The term ‘person’ is defined vide Section 2(m) of the Act which includes individual, association, Hindu undivided family and a company registered under Section 8 of the Companies Act, 2013 (Corresponding Section 25 of Companies Act, 1956). It is to be noted that the definition of ‘person’ is laid in an inclusive manner, which make the definition of ‘person’ wider in scope. Hence, apart from what is stated above as ‘person’ all other general meaning of ‘person’ shall be falling under the ambit of the Act.

Status of the registrations under Foreign Contribution (Regulation) Act, 1976:

It is known that till the FC(R)A, 2010 was enforced, the FC(R), 1976 was operative. Associations which have obtained registration under 1976 Act, will also be treated as registered under the 2010 Act and such registration shall be valid till 5 years from the date on which Section 11 was made effective. Hence, all persons who has obtained registration under the old act shall apply for renewal on or before 31.10.2015 (6 months prior to the lapse of registration in case of One year projects).

History of past operations for applying for registration:

FC(R)A has not specified any time limit for applying for registration under Section 11. Even the rules has not provided for the same. As per Q2 of FAQs hosted on the https://fcraonline.nic.in website, it is required that any person having existence for atleast three years can apply for registration under Section 11 despite of the fact that the law nowhere states the same.

Procedure for obtaining registration:

• Person intending to obtain registration shall make an online application vide Form FC-3 by filling all the required information;
• The applicant shall upload the singed or digitally signed application along with all the documents specified vide FC-3;
• The applicant shall pay a fee of Rs 2,000/- for obtaining registration under the Act.
• The applicant shall open an exclusive bank account for receipt and utilization of the foreign contribution.
• Though not specifically mentioned, it is also advisable to send a hard copy of the application and other related documents to the central government apart from the online application.

Grant of Certificate of Registration:

Section 12 of the Act deals with provisions relating to grant of the registration. The central government if it deems that the application for registration is not in conformity with the rules made thereunder, may reject the application. In case the application for grant of registrations is rejected for any reason, the applicant shall wait for six months from the date of rejection and apply freshly for registrations vide Form FC-3 and by complying with the rules made thereunder.

If the application is found to be good in all aspects, the central government after making such inquiry shall grant the certificate of registration within 90 days from the date of receipt of the application. If the central government fails to grant the registration within 90 days, it shall communicate the reasons to the applicant. Further, any person shall not be eligible for grant of certificate, if his certificate is suspended as on the date of making application. Also if there is any non-compliance of the provisions of FC(R)A, then such person is not eligible for grant of registration.

Validity of Certificate of Registration:

The certificate of registration is not a permanent one as it used to be under the 1976 Act. As per the 2010 Act, the certificate of registration is valid only for a period of 5 years from the date of its issue.

Renewal of Certificate of Registration:

The certificate of registration shall be renewed after the expiry of 5 years from the date of issue. Every person applying for such renewal has to make an application vide Form FC-3 , six months before the date of expiry of certificate of registration. Every applicant has to pay a fee of Rs 500/- for renewal of certificate of registration.

If any person fails to renew his certificate of registration, the registration granted under Section 11 shall cease from the date of completion of 5 years and an application for fresh registration has to be made in terms of Section 11 read with Rule 9 of the FC(R)A Rules, 2011.

However, if the person can prove sufficient grounds that failure to renew the registration within stipulated time, the central government can accept such application but not later than 4 months from the date of expiry of the original registration.

The central government normally renews the certificate within 90 days from the date of receipt of application for renewal. If the central government does not renew within such time period, it shall communicate the reasons to the applicant. The central government is empowered to refuse the renewal application, if it thinks such person has violated the provisions of the act or rules. It is to be specifically understood that in case of not granting such registration within 90 days or there is no communication for rejection of the application, it cannot be deemed that the registrations is granted.

Further, the registrations for which renewal is sought on the ground that 5 years has been exhausted from the date of certificate of registration, the renewal date has been extended to 15.03.2016 in terms of F. No II 21022/23(76)/2015- FCRA III dated 14. 12.2015.

Suspension of Certificate of Registration:

Section 13 deals with provisions relating to suspension of certificate of registration issued under Section 12 of the Act. The central government while considering cancellation of registration under Section 14, may after recording the reasons in writing, suspend the certificate of registration for a period not exceeding 180 days. The reasons for such suspension shall be issued by way of order in writing to the registration holder. However, a prior notice to registration holder regarding the suspension is not necessary.

A person whose certificate has been suspended shall not be eligible to receive foreign contribution during the said period of suspension. In cases of hardship, the central government may allow the receipt of foreign contribution subject to such terms and conditions.

Further, the person whose certificate has been suspended can only utilize only 25% of the unspent foreign contribution subject to prior permission from the central government on a plain paper. The remaining 75% of unspent money can only be spent post revocation of suspension order.

Cancellation of Certificate of Registration:

The central government may cancel the certificate of registration after making necessary inquiry and deems that any of the conditions mentioned under Section 14 are fit it to the case. However, the central government has to record its reasons in writing and grant an opportunity for hearing for the registration holder before the order for cancellation is made.

Any person whose certificate of registration is cancelled under Section 14 of the Act, cannot apply for registration or for grant of prior permission for a period of 3 years from the date of cancellation of certificate.

Intimation to Central Government vide Returns:

Filing of Annual Returns:

Every person registered under Section 12 of the Act, shall intimate central government or such authority prescribed by central government, the amount of foreign contribution received by it, the source from which foreign contribution is received and the manner and purposes for which such foreign contribution

Documents and Forms to be filed with FC-4:

Rule 17 of the FC(R)A Rules prescribe the details to be furnished along with FC-4, which are detailed as under:

Ø    Income and Expenditure Statement, Receipt and Payment Account and Balance sheet for the

stst

period starting from 1 April to 31 March of succeeding year.

Ø    FC-4 should also reflect the foreign contribution received in the exclusive bank account and shall

also include the details in respect of funds transferred to another bank accounts for utilization.

Ø    If the foreign contribution relates to only articles, the intimation shall be submitted in Form FC-1;

Ø    If the foreign contribution relates to only foreign securities, the intimation shall be submitted in

Form FC-1;

Ø    FC-4 or FC-1, as the case may be, shall be duly certified by a chartered accountant;

Ø      FC-4 shall be accompanied by the bank statement of the exclusive account maintained, duly certified by an officer of such bank;

Ø    The accounting statements referred above shall be preserved for a period of 6 years.

Ø    If the person has not received any foreign contribution in such financial year, even then a Nil report

has to be submitted. Further, if the person has not received or utilized any foreign contribution

during a financial year, it shall not be required to obtain a certificate from chartered accountant or

income and expenditure statement or receipt and payment account or balance sheet with FC-4.

Due Date for submission of FC-4:

FC-4 has to be submitted within 9 months from the closure of the financial year. That is to say, for the

st   st          st

period 1 April, 2014 to 31 March, 2015, the Form FC-4 shall be filed by 31 December, 2015. Now FC-4 has to mandatorily filed electronically as per the procedure laid down.

However, due to launch of the new website https://fcraonline.nic.in which facilitates filing of the Form st FC-4 online along with scanned copies of such details required,___________________ the due date has been extended from 31

th       3          th

December, 2015 to 15 March, 2016 . Hence, FC-4 for FY 14-15 can be filed till 15 March, 2016.

This article is contributed by Partners of SBS and Company LLP – Chartered Accountant Company You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

Introduction:

Services provided by employee to employer in the course of or in relation to his employment are excluded from the definition of ‘Service’ as given under Section 65B(44) of Finance Act, 1994. Hence no service tax is applicable on activities performed by employees to employers in course of employment. However the current article highlights the issues involved regarding applicability of service tax on any services extended by employer to employee in the course of or in relation to such employment. In corporate sector especially in IT Industry, it is the usual practice for the employer to extend a variety of services to employees. The following are widely provided such services.

• Canteen facility: This service includes supply of food at the work place for a concessional rate to employee.
• Access to sports/ gymnasium/cultural facilities: Many a times these services are provided at work place by employers without charging any amounts from employees as part of staff welfare. In such cases, no service is involved as there is no consideration. Sometimes these services are provided by charging nominal amounts from employee to recoup the maintenance costs of these facilities.
• Free transport facility: This service includes to and fro transportation of employees between work place and home.
• Concessional Loan/Finance Facilities: This service includes extending loans/finance at a concessional rate of interest.
• Notice Period Pay: Sometimes, employees are obligated to give prior notice say two months in advance for leaving the employment. In case the employee violates this condition, employer recovers/forfeits two months’ salary and allows him to leave the employment. This is a kind of passive act involving employer agreeing to tolerate an act (breach of prior notice) for consideration (two months’ salary).

With these insights on nature of services generally extended by employer to employee, let us proceed to examine the service tax implications on the said transactions.

Whether Employer Services to Employee Covered Under Section 65B(44):

The definition of ‘Service’ as provided under section 65B (44) is reproduced as under;

"service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include‑

• a provision of service by an employee to the employer in the course of or in relation to his employment;

(c) ---------------------------------------------------------------------------------

Upon plain reading of clause (b), by adopting literal interpretation, it appears that ‘Service’definition excludes only a provision of service by an employee to the employer in the course of or in relation to his employment but not vice versa. This would mean that if any employer provides any services to employee for consideration, then the same constitutes service and is not excluded.

Draft Circular of CBEC Propagating the Above Interpretation:

The above stated interpretation is unofficially mooted by Revenue at the time of introduction of Negative list based taxation through a draft circular F.No. 354/127/2012-TRU dated July 27, 2012, which states that, activities carried out by employers to employees for consideration are taxable, unless specified in the Negative List or otherwise exempted. The taxability has been clarified by para 9 and para 10 which is reproduced as follows;

“9. One of the ingredients for the taxation is that such activity should be provided for consideration. Where the employees pays for such services or where the amount is deducted from the salary, there does not seem to be any doubt. However, in certain situations,_______ such services may be provided against a portion of the salary foregone by the employee. Such activities will also be considered as having been made for a consideration and thus liable to tax…………………………………………………………………..

10. However, any activity available to all the employees free of charge without any reduction from the emoluments shall not be considered as an activity for consideration and will thus remain outside the purview of the service tax liability (facilities like crèche, gymnasium or a health club which all employees may use without any charge or reduction from the salary will be outside the tax net).”

In view of the above clarification, it is very clear that the Revenue target is to tax any non-cash benefits/services extended by employer to employee factored as part of employee CTC (cost to company) at the time of appointing an employee. This would mean that even for extending a benefit/service, if no separate charge is made but the same is factored as part of CTC, then the same is said to have been provided for consideration (i.e. employee service) and the same is liable to service tax.

For example, benefits like free holiday travel facility, car for personal use, rent free accommodation are factored in CTC but no costs are recovered from employees. These facilities even if provided without any charges from employees, the same would be considered as provided for consideration (i.e. employment) and would be subject to service tax.

However any activity which is not part of non-cash benefits/services considered for CTC provided free of cost without charging anything from employee then the same will not be a service on the reason that there is no consideration involved. For example, employer allowing unrestricted access to gym facility at work place for all employees which is not even factored for the purpose of CTC. In such cases, it is treated as activity undertaken without consideration and the same shall not be liable to service tax.

The above draft circular was released at the time of introduction of Negative list based taxation in the year 2012 for public comments; but for reasons unknown the same is not yet released officially. Despite this, there is no bar for Revenue authorities to resort to such interpretation.

Recently, the DGCEI in its MO Circular has dealt with the issue regarding leviability of service tax on forfeiture of security deposits by employees. The recovery of an amount, in terms of forfeiture of security deposit or other payments, from employee for leaving the organization without giving stipulated notice or completing the bond period is a common phenomenon in business organizations. The DGCEI opined that the activity of forfeiture of a security deposit for short notice given by the employee is a taxable service as per the provisions of Section 66E (e) of the Finance Act, 1994, covered under the declared services of, "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to doan act". Thus, services by employer to employee like Notice period pay are chargeable to service tax from the standpoint of DGCEI.

Recent Contrary view of Advance Ruling Authority (AAR):

On the other contrary, the AAR in a recent case of JP Morgan Services India Private Limited, 2015-TIOL-12-ARA-ST has considered the applicability of service tax on employer services. In the said case, the applicant has given an option to employees to hire cars for their personal and official use. For this requirement, the applicant has taken vehicles on hire from a leasing company. The applicant has recovered from the employees the lease charges that are paid to leasing company. The applicability of service tax on the lease charges paid by employee to employer has been examined.

The AAR has interpreted the definition of ‘Service’ under Section 65B(44) to mean that provision of service of by an employee to an employer in the course of or in relation to his employment cannot be considered as service as the same is excluded from the definition of ‘Service’. Once the activity of employment services to employer is excluded from ‘Service’ definition, the said definition cannot be applied for any non-monetary benefit extended by employer to employee in reciprocation to employee services.

In order to add strength to this interpretation, one can put forward the argument that an activity excluded from ‘Service’ definition is different from a service covered under Negative list or mega exemption notification and is outside the ambit of service tax in entirety i.e. even any activity undertaken in reciprocation to the said excluded employment service is also out of the ambit of service tax levy. However, in the humble opinion of the paper writers, the said judgment is not in detail to address the issue holistically from all possible corners.

Conclusion:

Going by plain language of ‘Service’ definition under Section 65B (44) and drawing support from draft circular, employer services to employee could be considered as liable to service tax. The contrary interpretation adopted by AAR created doubts over the service tax applicability thus making the issue further gloomier.

This article is contributed by Partners of SBS and Company LLP - Chartered Accountant Company. You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.