2015 (8) TMI 159 - SCH - Service Tax

Levy of service tax on the activity of mutual fund distribution - validity of circular - vide circular dated 05.11.2003, it was clarified that the commission received by distributors on mutual fund distribution would be liable to service tax as it would not fall within the expression business auxilliary services - High Court in 2004 (9) TMI 604 - ANDHRA PRADESH HIGH COURT has set aside the circular on the ground that it amounts to foreclosing discretion or judgment that may be exercised by the quasi judicial authority while deciding a particular lis under particular circumstances. Held that - The High Court referred to the proviso to Section 37B of the Central Excise Act, 1944, which categorically states that such kind of circulars cannot be issued. - Decided against the revenue.

Summary

The Supreme Court dismissed the appeal regarding service tax on mutual fund distribution. The High Court set aside a circular clarifying that commission on mutual fund distribution is liable to service tax. The High Court ruled the circular foreclosed discretion of the quasi-judicial authority, citing the proviso to Section 37B of the Central Excise Act.