TaxTMI 
TaxTMI 
2018 (1) TMI 378
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....ich the entire business of M/s. ABCL was taken over by M/s. Bunge. This agreement is referred to as BTA. In the said agreement several transactions were to be executed without which the BTA could not be enforced. The two transaction documents of relevance are that pertaining to sale of Gagan brand and non-compete and non-solicitation agreement. The said non-compete and non-solicitation agreements were to be entered into between the three promoters i.e. the appellants and Bunge. The said non-compete agreement was executed on 10.02.2012 and under this agreement, on receipt of Rs. 17 Crores by Shri Naresh Kumar Bajaj, Rs. 15 Crores each by Shri Shri Ashwani Kumar Bajaj and Shri Vikram Kumar Bajaj, they were restrained to carry on or participate or engage into or be involved in or assist or invest in any business / activity including production, manufacture, supply, trading, distribution, retailing, refining and processing or otherwise dealing in edible oils, fats and bakery shortening which is a same as or similar to the business acquired by Bunge under the BTA. Under the said agreement, the promoters were also debarred from soliciting any client, customer, supplier, vendor etc. of th....
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.... (b) Whether the activity undertaken by the appellant falls under the category of Business Auxiliary Service or not; and (c) Whether the extended period of extension is invokable or not; 6. As regards the issue (a) above i.e. whether the activity undertaken by the appellant is taxable prior to 01.07.2012 or not - We find that prior to 01.07.2012, non-compete agreements were not specifically taxable under Finance Act, 1994. It is only with effect from 01.07.2012 when Section 66E(e) of the Finance Act agreeing to the obligation to refrain from an act, or to tolerate an act or a situation or to do an act constituted a declared service on which service tax was payable with effect from 01.07.2012. The TRU Circular (DOF No.334/1/2012-TRU dated 16.03.2012) clarifies the situation in Para 2.4 which read as under:- "2.4 Activities specified in the declared list are services. Declared Services are activities that have been specified in Section 66E of the Act. When such activities are carried out by one person for another in the taxable territory for a consideration then such activities are taxable services. For guidance on the declared services ple....
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....ub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods." We find that the adjudicating authority has made specific observations that non-compete agreement has promoted the goods of the M/s. Bunge. Therefore, it is better to know the definition of marketing and promotion . In the Oxford English Dictionary, the term marketing has been defined to mean the action or business of promoting or selling products including market research and advertising. In Black Laws, the said terms has been defined to mean the act or process of promoting and selling, the part of the business concerned with meeting customer s needs. Further, the term promote has been defined by Oxford English Dictionary to mean support actively, publicize and sell, encourage. From the tenor of the dictionary meaning ascribed to the words, promote and market , it is abundantly clear th....
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....Pradesh High Court drew a distinction between the expenditure made for sales promotion and commission paid to agents. It was held that commission paid to the agents cannot be termed as expenditure on sales promotion. (viii) From the definition of sales promotion, it is apparent that in case of sales promotion a large population of consumers is targeted. Such activities relate to promotion of sales in general to the consumers at large and are more in the nature of the activities referred to in the preceding paragraph. Commission agent has been defined under the explanation to business auxiliary service and insofar as the same is relevant for the present purpose means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration. Thus, the commission agent merely acts as an agent of the principal for sale of goods and such sales are directly made by the commission agent to the consumer. In the present case, it is the case of the assessee that service tax had been paid on commission paid to the commission agent for sale of final product. However, there is nothing to indicate that such commission ....