Apex court stays levy of Service Tax on lawyers for unconstitutionality

The apex court has issued a stay against  an order  of the Hon™ble High Court of Bombay, dated 15.12.2014, 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. The case was initially pending and finally an order was passed by the Hon™ble High Court on 15th December, 2014, dismissing Advocate P C Joshi™s petition.

Section 65 (105) of the Finance Act, 1994: Levy of Service Tax

Rendering Services

(zzzzm) (i) to any person, by a business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner;

(ii) to any business entity, by any person, in relation to representational services before any court, tribunal or authority;

(iii)to any business entity, by an arbitral tribunal, in respect of arbitration. Explanation:- For the purposes of this item, the expressions arbitration and arbitral tribunal shall have the meanings respectively assigned to them in the Arbitration and Conciliation Act, 1996 (26 of 1996);]

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.

However, on such grounds of representation being made, the Supreme Court finally on 10th August, 2015 stayed the Bombay High Court order dismissing  the petition challenging  the levy of service tax on lawyers and the matter is listed for further court proceedings.

Please click on the below link to read the Bombay High Court Judgement.

Bombay High Court Judgement_Levy of Service Tax on Lawyers

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