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2024 (2) TMI 964 - AT - Service TaxDeclared Service u/s 66 E(e) of FA or not - Business Transfer Agreement (BTA) entered by the Appellant having a non-compete clause - HELD THAT:- The business transfer carried out by the Appellant is related to an ongoing concern and as per the mega exemption vide Notification No. 25/2012-Service tax dated 20/06/2012 “Service by way of transfer of a going concern is fully exempted from all of the service tax leviable thereon. From the evidence on record, no finding can be made that substantial portion of the agreement refers to the conditions/obligations to be followed M/s Sicon like non-compete clauses, performance guarantee for two years etc., for which they have received consideration of Rs. 106,79,67,816/- as held by the Adjudicating authority. As observed by the Tribunal in the matter of M/s Universal Medicare [2019 (6) TMI 166 - CESTAT AHMEDABAD], an agreement has to be interpreted as per the language and intention of the parties to such agreement. Once an ongoing concern is transferred along with assets and liabilities by paying huge amount, it is just obvious that if such noncompete clause is not present, the appellant could immediately start the same business. Hence such clause is normal in transfer of business and the condition of noncompete clause cannot be separated from the contract ended between the parties to bring the transaction under the ambit of service tax by denying the benefit of notification No. 25/2012-Service tax. Moreover, Ministry of Finance vide Circular No. 178/10/2022 dated 03.08.2022 clarified that under service tax, GST demand, unless payment has been made for an independent activity of tolerating an act under an independent arrangement entered into for such activity of tolerating an act, such payments will not constitute ‘consideration’ and hence such activities do not constitute “supply” within the meaning of the Act. Since the entire service tax liability is set aside, interest and penalty imposed on Appellants are also set aside - Appeal allowed.
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