M/S. ALL INDIA ASSOCIATION OF AUTHORIZED MONEY CHANGERS AND MONEY TRANSFER AGENTS vs. THE UNION OF INDIA THROUGH THE SECRETARY, MINISTRY OF FINANCE, DEPT. OF REVENUE AND ORS.
What did the High Court hold?
The High Court disposed of the writ petition, clarifying that office memorandums addressed to counsel in response to specific queries cannot bind statutory authorities. The Court emphasized that assessing officers must exercise their powers in accordance with the law and should not be influenced by any directions or contents of office memorandums. It was clarified that assessing officers should not solely rely on the subsequent circular dated October 14, 2014, which superseded the earlier circular of July 10, 2012. Instead, they must allow assessees to raise all contentions and consider them in accordance with the law. The Court found no reason to clarify other issues as it would be purely academic. All contentions raised in the writ petition were kept open. The operative direction was to dispose of the writ petition accordingly, with no order as to costs.
What were the facts?
The petitioners, an association of authorized money changers and money transfer agents, filed a writ petition challenging Circular No. 180/06/2014-ST dated October 14, 2014, issued by Respondent No. 3. They argued that the services rendered by their members for money remittance from overseas to India do not attract service tax. They relied on an earlier circular dated July 10, 2012, which they claimed clarified this position. The impugned circular superseded the earlier one. The revenue, in its affidavit, supported the circular and stated that for the intervening period (July 1, 2012, to October 13, 2014), service tax was exempted vide Notification No. 19/2015-ST dated October 14, 2015, issued under Section 11C of the Central Excise Act, 1944, as made applicable to service tax via Section 83 of the Finance Act, 1994. This exemption was due to the prevalent practice of non-levy.
What were the issues?
1. Whether Circular No. 180/06/2014-ST dated October 14, 2014, issued by Respondent No. 3, is without jurisdiction and ultra vires the Finance Act, 1944, and consequently, liable to be set aside. 2. Whether a Writ of Certiorari should be issued to quash and set aside the impugned Circular No. 180/06/2014-ST dated October 14, 2014, to the extent it levies service tax on consideration received by agents for rendering services to an overseas entity. Assessee's Contentions: The petitioners contended that the services rendered by their members do not attract service tax, and the impugned circular, issued without any change in law, wrongly supersedes a previous circular that clarified this position. They argued that the entire sequence of transactions in money remittance from overseas customers through the MTSO route never attracts service tax, and the revenue is attempting to displace its own prior clarification. Revenue's Contentions: The revenue supported the impugned circular, stating it was issued to clarify the legal position. They also referred to an exemption notification for the intervening period and argued that circulars and instructions issued by the Board are binding on revenue authorities unless they conflict with statutory provisions. They reiterated that the circular dated October 14, 2014, correctly interprets statutory provisions.
Which sections of the Income-tax Act were involved?
Section 11C, Section 83, Article 226, Finance Act, 1944, Finance Act, 1994
AI-generated summary — verify with the full judgment below
rpa 1/6 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.11930 OF 2015 M/s. All India Association of Authorized Money Changers & Money Transfer Agents .. Petitioners Vs. The Union of India & Ors. .. Respondents …... Mr. V. Sridharan, Senior Counsel a/w. Mr. Prakash Shah i/b. M/s. PDS Legal, Advocate for the Petitioner. Mr. Pradeep S. Jetly a/w. Ms. Shalaka Gujar, Advocate for the Respondents. …... CORAM : S.C. DHARMADHIKARI AND PRAKASH D. NAIK, JJ. DATED : APRIL 3, 2017. P.C. : By this writ petition under Article 226 of the Constitution of India, the petitioners are seeking following two reliefs: “(a) that this Hon'ble Court be pleased to declare that the impugned Circular No.180/06/2014-ST dated 14.10.2014 issued by the Respondent No.3 is without jurisdiction, is ultra vires the Finance Act, 1944, and is of no effect and accordingly, set aside the same;
rpa 2/6 (b) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the petitioners case and after going into the validity and legality thereof to quash and set aside the impugned Circular No.180/06/2014-ST dated 14.10.2014 issued by the Respondent No.3 to the extent it levy's service tax on consideration received by the agents for rendering service to an overseas entity.”
The petitioners before us are association of authorized money changers and money transfer agents.
They are aggrieved and dissatisfied with the circular, the details of which are set out in prayer Clause (a) above essentially because the process of money transfer as explained in the writ petition from paragraph 3.2 onwards till upto 5.2 does not attract the levy of service tax.
They rely on a circular issued by respondent no.3 on 10th July, 2012, copy of which is at Annexure "C" to the paper book.
rpa 3/6
The argument before us is that though there is no change in law, still another circular No.180/6/2014-ST dated 14th October, 2014 has been issued. This impugned circular supersedes the earlier circular.
The essential argument is that the services rendered by the petitioners associate through its members do not attract the service tax.
We had on the earlier occasion, invited attention of Mr. Jetly to the affidavit-in-reply filed in this writ petition wherein the revenue supported the impugned circular.
We have also invited his attention to page no.48 of the paper book, which is paragraph 4 of the affidavit-in-reply. Paragraph 4 reads as under: “4 For the intervening period i.e. from 01-07-2012 to 13-10-2014, Service Tax on such services was exempted vide Notification No.19/2015-ST dated 14-10-2015, issued in exercise of the powers conferred by Section 11C of the Central
rpa 4/6 Excise Act, 1944 (1 of 1944) as made applicable to like matters in Service Tax vide section 83 of the Finance Act, 1994 (32 of 1994). This exemption was given because of the generally prevalent practice of non-levy of Service Tax on the services provided by the Indian Bank or other entity acting as an agent to the [MTSO], in relation to remittance of foreign currency from outside India to India even though this services was liable to service tax, which was not being paid according to the said practice.”
The justification that is provided in the subsequent paragraph is that the circular was issued only to clarify the legal position.
Mr. Shah appearing for the petitioners contends otherwise. He would submit that though the entire sequence of transactions in remittance of money from the overseas customer through the MTSO route never attracts the levy, still the revenue is seeking to displace its own circular clarifying the legal position.
Mr. Jetly had sought time on the earlier occasion to take instructions.
rpa 5/6
Today, he has produced a copy of memorandum dated 3rd February, 2017.
That office memorandum purports to state that circulars and instructions issued by the Board are not binding on the Court or the assessee. The circulars and instructions issued by the Board are binding in law on the authorities unless they are in conflict with the statutory provisions.
In paragraph 3 of this office memorandum, the revenue reiterates the position that its subsequent circular dated 14th October, 2014 is binding on the revenue authorities as it correctly interprets the statutory provisions as explained in this office memorandum of even date namely 6th January, 2017.
Today, it is agreed by both sides that there are several members of the petitioners association, but, they have not been assessed to tax. In the event they are assessed to service tax, we are clarifying that such office memorandum as addressed to Mr. Jetly in reply to his communication with the Revenue officials can never bind the statutory authorities. The Central Government cannot direct the assessing officer to take a particular view of the
rpa 6/6 matter as that would be a direct interference with his powers as an assessing officer. He has to exercise the powers in accordance with law. In the event, there are circulars issued and prior to the impugned one, then, they would continue to bind the Assessing Officer and others unless the revenue officials are able to point out that they are plainly inconsistent or in conflict with the provisions of law. Therefore, we clarify that the 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.
Writ Petition is disposed of accordingly. No order as to costs.
All contentions raised in the writ petition are kept open. (PRAKASH D. NAIK, J.) (S.C. DHARMADHIKARI, J.)
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