CESTAT says Notice pay is not a taxable service

Can an employer be liable to service tax on notice pay recovered from an employee who leaves without serving the contractual notice period? CESTAT Chandigarh says no. 

Notice pay arises from the employment contract and compensates the employer for the employee's failure to serve the notice period. Following the Madras High Court and other Tribunal decisions, and the CBIC's own clarification, the Tribunal held that such recovery is not consideration for a taxable service.