TaxTMI 
TaxTMI 
2026 (4) TMI 1356
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.... on the marketing services received by the appellant and also on the bonus payments made to the foreign service providers under Reverse Charge Mechanism (RCM). The Commissioner in the impugned order confirmed both the demands and imposed penalties under section 77 and 78 of the Finance Act 1994. Aggrieved by this order, the appellant is now in appeal before us. 3. The Learned Counsel submits that the appellant is in the business of manufacture of photovoltaic modules and has been exporting these goods to European countries and they also undertake processing/ tempering of glass for the solar requirement and architecture requirement. It is submitted that the appellant had entered into a Share Purchase Agreement and the consideration identified in the agreement is primarily a consideration for purchase of shares from two individuals who were the shareholders of the foreign company namely M/s. EMMVEE Photovoltaic GmbH, Germany. The amount on which service tax is being demanded is actually the amount towards the 'Share Capital' and not against any services received by them. They have also placed on record a copy of the application filed to the AD Bank for transfer of funds which amou....
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....and of Rs. 15,18,159/-; and (ii) non-payment of service tax on certain payments made to the foreign service providers in the name of bonus payments and the service tax demand on this account is Rs.26,75,322/-. 5.1 With regard to the commission paid to the service providers, the appellant has submitted that the same is not being contested and the said amount has been paid with applicable interest of Rs.3,05,518/- on 14.03.2013. Therefore, we uphold the service tax demand of Rs.15,18,159/- along with interest of Rs.3,05,518/-. 6. With regard to the second issue the Commissioner in the impugned order observed as follows: "6.4 As per the documents available, it is a fact that the Foreign Marketing Company viz M/s. Emmvee Photovoltaic GmbH, Germany were the marketing agents of the assessee and the assessee was making payment in Foreign Currency towards marketing commission and were paying Service Tax on such commission paid under the category 'Business Auxiliary Service', as import of service in terms of Section 66 A of the Act. It is also an admitted fact that the assessee acquired 51% of unlisted stock holding of the Foreign Company with effect from 01.....
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....atement given before the Superintendent under Section 14 of the Central Excise Act, 1944 could not substantiate the reason for additional payment of an amount of EUR 1,50,000 each to the two sellers which is over and above the agreed upon value of the unlisted shares sold. Further, the said bonus payment is also related to the performance for the future period of sale transaction. As alleged in the SCN, the said bonus payment made is nothing but the consideration payable for the future business of marketing by the two share holders of the Marketing Company in as much as the bonus payment made is to the individuals and not to the Marketing Company. Once the transaction for sale of stock holdings is over, any payment made subject to any conditions will not become part of the sale value of the shares. Further, when the Stock holdings are valued at the time of actual transfer of shares, any payment made subsequent to the acquisition only on crossing certain level of turnover, to the individuals instead of the Marketing Company, would definitely related to the sales turnover and the same is nothing to do with the Fair Price of the stock holdings, as correctly alleged in the SCN. It is a....
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....The Seller No. 1 hereby transfers the stockholding split under Paragraph 1 hereof to Acquirer with effect from 01 January 2012 and the Acquirer hereby accepts the transfer. a) The with purchase price is in 2 instalments (Purchase Price Instalment No. 1 and Purchase Price Instalment No.2) and is due for payment and is payable as follows: a. The Purchase Price Instalment No. 1 in an amount of EUR 300.000.00 (in words: three hundred thousands of Euros) is due for payment and payable by 27 December 2011 at the latest to the credit of the wing bank account of Seller No. 1: b. The Purchase price Instalment No. 2 in an amount of EUR 150,000.00 (in words one hundred and fifty thousand of Euros) is due for payment and payable by 31st December 2011........... 4. In addition to the foregoing, the Parties also agree to a bonus payment in an amount of EUR 300,000.00 (in words: three hundred thousands of Euros) in two instalments, which are to become payable and to be and according to the following conditions: as to Bonus Payment No. 1 in an amount of EUR 150,000.00 (in words: one hundred and fifty thousands of Euros) and as to Bonus Payment No. 2 in an amount....
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....e payable and to be according to the following conditions: as to Bonus Payment No. 1 in an amount of EUR 150.000.00 on ds one hundred and fifty thousands of Euros) and as to Bonus Payment No. 2 in an amount of EUR 40.000.00 (in words: one hundred and fifty thousands of Euros) a) The Bonus payment No.1 in an amount of EUR 150, 000.00 ---------is to become payable on 15.12.2012 once the following conditions are fulfilled. aa) that Seller No.2 is still active as a manager of Emmvee Photovoltaics GmbH (Inc.) at that point in time. bb) that Emmvee Photovoltaics GmbH (Inc.) including its subsidiaries generates a sales turnover of more than EUR 20,000,000.00 (in words: twenty millions of Euros) in project business, during the time period from 1.01.2012 to 10.12.2012. The sales turnover is to be calculated from invoices posted to the accounts (sales mover of Emmvee Photovoltaics GmbH (Inc.) plus the sales turnover of associated businesses (subsidiaries). Should the foregoing figure of sales turnover not be achieved, then there is no claim to Bonus Payment No 1 hereunder. b) Bonus Payment No. 2 in an amount of EUR 150,000.00 (in words: one hundred and fif....