2017 (4) TMI 505 - HC - Service Tax

Constitutional validity of circular No.180/06/2014-ST dated 14.10.2014 - authorized money changers and money transfer agents - The essential argument is that the services rendered by the petitioners associate through its members do not attract the service tax. - Held that - assessing officer should not be influenced by any directions and contents of the office memorandum. He should not go by the subsequent circular dated 14th October, 2014 which supersedes the earlier circular of 10th July, 2012. He must allow the assessee to raise all contentions and consider them in accordance with law. Presently, we do not see any reason to clarify other issues because that would be purely academic.

Summary

Issues:
Challenge to the validity of Circular No.180/06/2014-ST dated 14.10.2014 for levying service tax on consideration received by agents for services to an overseas entity.

Analysis:
The petitioners, an association of authorized money changers and money transfer agents, challenged Circular No.180/06/2014-ST issued by Respondent No.3, seeking two reliefs under Article 226 of the Constitution of India. They argued that the process of money transfer does not attract service tax, relying on a previous circular from 2012. Despite no change in the law, a new circular was issued in 2014, superseding the earlier one. The crux of the argument was that the services provided by the petitioners' associates do not fall under the service tax ambit.

The Court noted the revenue's support for the impugned circular and a subsequent office memorandum emphasizing that circulars are not binding on the Court or the assessee if in conflict with statutory provisions. The revenue contended that the 2014 circular correctly interpreted statutory provisions. However, the Court clarified that assessing officers should not be influenced by such directions and should consider all contentions in accordance with the law. The Court emphasized that prior circulars continue to bind assessing officers unless they conflict with the law.

In the judgment, it was highlighted that the assessing officer must not be swayed by the subsequent circular from 2014, which supersedes the 2012 circular. The Court maintained that the assessing officer should allow the assessee to present all contentions and decide in compliance with the law. The judgment concluded by disposing of the writ petition without any costs, keeping all contentions raised in the petition open for future consideration. The Court clarified that addressing other issues at that point would be purely academic.