Whether a Senior Advocate is Liable to Pay Service Tax? Jharkhand HC Quashes Demand Notice

September 18, 2022

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by: newsoftwareguides_36xqlo

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Categories: Tax Service

Whether a Senior Advocate is Liable to Pay Service Tax? Jharkhand HC Quashes Demand Notice

The bench observed that it is evident that the Central Government, vide Notification exempted certain services from the ambit of Section 66B of the Finance Act, 1994. Serial No.6 of the said notification exempted services provided by an individual as an advocate or a partnership firm of advocates by way of legal services to an advocate or partnership firm of advocates providing legal services, any person other than a business entity or a business entity with a turnover up to Rupees ten lakh in the preceding financial year.

High Court stated that “Since both the amendments relate back to the original document, the demand notice issued by the authority concerned for payment of service tax on legal services provided by a Senior Advocate for the period from 01.04.2016 to 05.06.2016 is held to be not sustainable in the eyes of law.”

In view of the above, the bench allowed the petition.

Case Title: Madhu Sudan Mittal v. Union of India

Bench: Chief Justice Ravi Ranjan and Justice Sujit Narayan Prasad

Case No.: W.P.(T) No. 4448 of 2021

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Recently, Jharkhand HC ruled that, Senior Advocates are not liable to pay service tax.

The bench of Chief Justice Ravi Ranjan and Justice Sujit Narayan Prasad was dealing with the petition filed for quashing two Notifications to the extent that it seeks to recover service tax directly from Senior Advocates for the legal services provided by them.

In this case, The petitioner is a Senior Advocate practicing in Jharkhand HC and being aggrieved with the two Notifications to the extent that it seeks to recover service tax directly from Senior Advocates for the legal services provided by them and to the further extent that it envisages the relationship between a Senior Advocate and an advocate / firm as that of a client and counsel.

It is the further case of the writ petitioner that the provision for payment of Service Tax under Reverse Charge Mechanism was specifically introduced keeping in view that Senior Advocates / Advocates are seated as an officer of the court and in order to enable them to effectively discharge duties as an officer of the court, they were absolved of the compliances and rigors under the Finance Act, 1994 and the Rules made thereunder.

The issue for consideration before the bench was:

Whether the two notifications challenged by the petitioner are valid or not?

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The bench observed that it is evident that the Central Government, vide Notification exempted certain services from the ambit of Section 66B of the Finance Act, 1994. Serial No.6 of the said notification exempted services provided by an individual as an advocate or a partnership firm of advocates by way of legal services to an advocate or partnership firm of advocates providing legal services, any person other than a business entity or a business entity with a turnover up to Rupees ten lakh in the preceding financial year.

High Court stated that “Since both the amendments relate back to the original document, the demand notice issued by the authority concerned for payment of service tax on legal services provided by a Senior Advocate for the period from 01.04.2016 to 05.06.2016 is held to be not sustainable in the eyes of law.”

In view of the above, the bench allowed the petition.

Case Title: Madhu Sudan Mittal v. Union of India

Bench: Chief Justice Ravi Ranjan and Justice Sujit Narayan Prasad

Case No.: W.P.(T) No. 4448 of 2021

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