Monday, August 17, 2015

Supreme Court stays Bombay High Court Judgement on levy of Service Tax on lawyers

Supreme Court stays Bombay High Court Judgement on levy of Service Tax on lawyers

The apex court has issued a stay against an order dated 15.12.2014 of the Hon'ble High Court of Bombay, in the matter of PC Joshi Vs. Union of India. 

The petition before the High Court of Bombay had challenged the levy of service tax on lawyers. The petitioner, before the High Court of Bombay, raised the issue that there should be no levy of service tax on services provided by the advocates as stated in Section 65 of the Finance Act, 1994, which is violative of the constitutional provision of providing justice to all. However, the Court observed that the legal profession is not a charitable profession and in this era of multinational companies and businesses, assumes the role of an advisor or consultant just like the profession of Chartered Accountants or other professionals. Hence, an order was passed by the Hon'ble High Court on 15th December, 2014, dismissing Advocate P C Joshi's petition thereby ruling that Service tax will be applicable on Lawyers too.

Eventually the impugned order was challenged by the Bombay Bar Association before the Supreme Court, who by virtue of Article 136 of the Constitution of India, took up the matter for hearing. The petition stated that the imposition of the tax is oppressive, unjust, unreasonable and ultra vires (beyond legal authority) of the right to equality and freedom to carry on a trade or profession and thus, unconstitutional in nature. It argued that the relationship between a client and lawyer must not be seen as that of a service provider and a client as the lawyer is merely a representative of his client.

The Supreme Court, on 10th August, 2015, stayed the Bombay High Court order dismissing the petition challenging the levy of service tax on lawyers. Hence, the imbroglio continues until the same is settled by the Supreme Court. 

Please click on the below link to read the provisions of The Finance Act on Service Tax on Lawyers.
Apex court stays levy of Service Tax on lawyers for unconstitutionality

Please click below to read the complete judgement of the Bombay High Court.
Bombay High Court Judgement for levy of service tax on lawyers

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