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TMI Blog2023 (5) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... arity on the calculation method for assets and turnover because such a matter was causing confusion among the business entities. The said notification, therefore, being clarificatory in nature, applies with retrospective effect. It is noted that this Tribunal in the matter of Eli Lilly and Company [ 2020 (3) TMI 1446 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] considered that the De Minimis notification dated 4.3.2011, and Notification dated 4.3.2016, both issued by the Ministry of Corporate Affairs under Section 54 of the Act provide exemption to certain transactions due to their small size. Further, the Press Release dated 30.3.2017 states and informs that for combination that fall within the threshold limits, there would be no requirement for their filings to be notified before the CCI. After considering the De Minimis notification dated 4.3.2016 and the Press Release dated 30.3.2017, this Tribunal decided that for the purpose of calculation of assets and turnover, what is being acquired is relevant as the assets and turnover of what is left over with the seller after the acquisition will not have any role to play in the context of the business of the purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Act. The Appellant entered into a brand purchase agreement with Johnson Johnson Pvt. Limited ( Seller No. 1 ) dated 12.2.2015 for the purchase of trade mark Savlon along with certain inventories, technical knowhow and other promotional material ( Savlon Agreement ). This purchase of the trade mark etc. is referred to as Transaction-I . The Appellant on the same date 12.2.2015 entered into another brand purchase agreement with Johnson Johnson Pte Limited ( Seller No. II ) for the purchase of the trade mark Shower to Shower along with attendant knowhow and their promotional material ( Shower to Shower Agreement ). This purchase is referred to as Transaction-II . 3. The Appellant further submits that on 4.3.2011, the Ministry of Corporate Affairs, Government of India issued a notification under section 54 of the Act and vide this notification No. S.O. 482(E), any transaction wherein an enterprise having assets of not more than Rs.250 crores or turnover of not more than Rs.750 crores whose control, shares, voting rights or assets would be acquired, was exempted from the provisions of section 5 of the Act for a period of five years. He has further submitted that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and was therefore not required to be notified under Section 6(2) of the Act. The Appellant has further stated that the CCI vide its order dated 22.3.2017 unconditionally approved the transactions under Section 31(1) of the Act finding that there was no appreciable adverse effect on competition in the defined relevant markets, but thereafter issued a show cause notice dated 29.3.2017 to the Appellant under Section 43A of the Act directing the Appellant to file a response to the show cause notice for not filing the transactions under Section 6(2) for approval of the CCI. The Appellant has stated that it filed its response to the show cause notice and presented arguments before the CCI along with written submissions, and vide the impugned order dated 11.12.2017, its arguments were rejected by the CCI and the fine of Rs. 5 Lakhs only as penalty was imposed on the Appellant under Section 43A of the Act for alleged failure to give notice under Sub-section 2 of Section 6 of the Act and aggrieved by the Impugned order the Appellant has filed this appeal. 6. We heard the arguments advanced by the Learned Counsels for the both parties and perused the record. The Learned Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 5 of the Act. The Learned Counsel for Appellant has also contended that the inference of the CCI that the absence of non-complete clause regarding the said transactions to conduct the same business makes the Appellant liable for notifying the said transaction is not correct, because the transactions permitted the sellers to carry on the business associated with the acquired trademarks and no assets are amounting to a business or a unit or a division of the transferor were acquired. He has, therefore, contended that both the Transactions-I and -II did not contemplate acquisition of an enterprise as is required under Section 5 of the Act and hence there was no requirement for these transactions to be notified under the provisions of Section 6(2) of the Act. 8. The Learned Counsel for Appellant has referred to the notification dated 2.3.2011 issued by the Ministry of Corporate Affairs, Government of India under Section 54(a) to point out that the said notification requires that only relevant figures attributable to the assets being acquired ought to be taken into account for the purposes of calculation of threshold of total assets and turnover. He has pointed out that notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the state. In this connection, he has cited the judgment of Hon ble Supreme Court in the matter of Kailash Nath vs. State of U.P Ors. (AIR 1957 SC 790), wherein it is held that notification which is made using powers conferred by the statute has statutory force and validity. He has also referred to the judgment of Hon ble Supreme Court in the matter of Collector of Central Excise, Bombay-1 and Anr. vs. M/s. Parle Exports Pvt. Ltd. (1991 1 SCC 345), wherein Hon ble Supreme Court has held that while interpreting an exemption clause, liberal interpretation should be given and in favour of the subject of exemption. 11. Regarding the restrospective application of the De Minimis Exemption, the Learned Counsel for the Appellant has cited the judgment of Hon ble Supreme Court in the matter of Government of India Ors. vs. Indian Tobacco Association (2005 7 SCC 396) and has submitted that following the judgment in this case, the application of De Minimis Exemption Notification dated 27.3.2017, is clarificatory and it will have retrospective effect. Regarding the restrospective application of a notification which is clarificatory in nature, he has also cited the judgment of Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive effect. He has further pointed to the judgment of Hon ble Supreme court in the matter of Shyamsunder and Anr. vs. Ram Kumar Anr. [2001 8 SCC 24] to claim that if an enactment is expressed in a certain language, which is capable of interpretation as either having prospective or retrospective effect, then the interpretation should be construed as prospective only. To buttress his arguments, he has contended that in the new De Minimis Exemption Notification dated 27.3.2017, there is no mention that the said notification is retrospective in nature, and therefore, it would not be correct to construe its retrospective operation. Further, he has argued that the Press Release regarding the revised De Minimis notification does not have statutory force as that of the notification and therefore, cannot alter the statutory position prescribed by law. 15. Regarding the issue of relevant assets and relevant turnover, the Learned Counsel for CCI has pointed out that the Explanation (c) of section 5 of the Act provides that the valuation of assets shall be determined by taking the book value of assets as shown in the audited books of account of the enterprise and the value of assets shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Combination Regulations, the said transactions were not to be notified because the ITC was under a bonafide belief that the transactions did not require to be notified under Section 6(2) since the Transactions had been held as not violating Section 6(1) is a question of law, which we will not deal in this judgment as the parties have pressed that only the question of imposition of penalty may be considered in this judgment. 19. We note that section 5 of the Act stipulates that only certain transactions, only such combinations would require to be notified that exceed the thresholds as stated in section 5(a) (i) (ii) of the Act. A perusal of 5 makes the following clear insofar as jurisdictional thresholds are concerned when considering the assets and turnover of the parties to the transaction or the those of the group of companies of which they are part :- JURISDICTIONAL THRESHOLDS Parties Test The parties have combined assets in India of INR 2,000 crores (approx. USD 268 million) or combined turnover in India of INR 6,000 crores (approx. USD 805-million); or the parties have combined worldwide ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of five years from the date of publication of this notification in the official gazette. Where a portion of an enterprise or division or business is being acquired, taken control of merged or amalgamated with another enterprise, the value of assets of the said portion or division or business and or attributable to it, shall be the relevant assets and turnover to be taken into account for the purpose of calculating the thresholds under section 5 of the Act. The value of the said portion or division or business shall be determined by taking the book value of the assets as shown, in the audited books of accounts of the enterprise or as per statutory auditor's report where the financial statement have not yet become due to be filed, in the financial year immediately preceding the financial year in which the date of the proposed combination falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout- design or similar othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of this Tribunal in the matter of Eli Lilly and Company Vs. CCI (TA(AT) Company Appeal No. 03 of 2017, wherein this Tribunal dealt with the issue of calculation of the assets and turnover of the company from which such assets and turnover are being acquired. The relevant part of the Eli Lilly judgment is as follows:- 26. The intention behind the Notification dated 04.03.2011 issued by the Central Government under Section 54 of the Act was to exempt certain transactions due to their small size . The intention of the Government is made clear by the Press Release dated 30.03.2017 where it is stated that combinations falling within the threshold limits would not require to be filed before the Competition Commission of India. The reform is in pursuance of the Government's objective of promoting Ease of Doing Business in the country and is expected to make India a more attractive destination for Foreign Direct Investment. The notification is expected to enable greater freedom to industry in taking legitimate business decisions towards further accelerating India's economic growth. 27. This makes it clear that the Central Government did not wish that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to play in the context of the business of the purchaser/acquirer after the acquisition. On this basis, this Tribunal set aside the order of CCI in the Eli Lilly case. 25. Following the judgment of this Tribunal in the Eli Lilly case, we are of the clear view that the principle laid down in this judgment will apply in the facts of the present case too. 26. We also take note of the judgment in the matter of Commissioner of Income Tax v Gold Coin Health Foods Pvt. Ltd. [(2008) 9 SCC 622] and also in the matter of Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika Township Private Limited [(2015) 1 SCC 1], in which Hon ble Supreme Court has held as follows:- If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. 27. We note that the relevant turnover attributable to the two trademarks Savlon and Shower to Shower , which are being transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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