TMI Blog2017 (4) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry the appellants did not take any effort to get the issue clarified except seeking advice from Pepsi. When the appellants were showing and discharging service tax on receipts for various promotional activities it is apparent that significant portion of receipt under the category of ‘pouring fees’ received for such activities should have been included in the tax returns during the material time - extended period and penalty rightly imposed. Appeal dismissed - decided against appellant. - Service Tax Appeal No. 241 of 2012 - Final Order No. 52843/2017 - Dated:- 10-4-2017 - Hon ble Shri S.K. Mohanty, Member (Judicial) And Hon ble Shri B. Ravichandran, Member (Technical) Shri Srinivas Kotni, Advocate for the appellant S/S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears Pepsi shall pay pouring fees starting from ₹ 52 lakhs for the first year and after progressive increase to pay ₹ 129 lakhs for the 6th year. This agreement is with reference to certain specific cinema complexes run by appellant. The Revenue proceeded to consider the said pouring fees as taxable income under the category of Business Auxiliary Service. The appellants have promoted the products of Pepsi and the consideration is attributable to said promotion. Accordingly, the proceedings initiated against the appellant concluded in the confirmation of demand of service tax of ₹ 40,14,042/- for the period 01/07/2003 to 31/03/2007. The Original Authority also imposed penalty of equivalent amount under Section 78 and furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hines and marketing of various products of Pepsi in their premises. It is not a simple sale agreement of products. Regarding the argument of the appellant on the nature of pouring fees, the learned AR submitted that the agreement itself did not elaborate the nature of such fee. However, from the context and the schedule of payment, it is clear that the said pouring fee is nothing but a consideration for promotional activity undertaken by the appellant. Regarding demand for extended period and imposition of penalty, learned AR submitted that the appellant were registered with the Department and were paying service tax under BAS. They did not include the full consideration received from Pepsi in their periodical returns filed with the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar act of the appellant to receive the pouring fees. In fact, in the letter dated 23/01/2012 Pepsico clarified to the appellant that the said fee is paid to dissuade PVR from entering into similar contract with other competitor of Pepsi. We note that if pouring fee is to be considered as non-compete fee, first of all there should have been indication in the agreement to that effect and second such non-compete arrangement should be enforceable by law. Payment of an amount to dissuade an appellant from displaying competitor s products by itself cannot be equated to a noncompete agreement. In fact this type of submission is made based on clarification of Pepsi. There is no clause in the agreement itself regarding the nature of such fee. We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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