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Whether levy of service-tax on Advocates is Constitutional – Article 19(1)(g)

Hetvi Sheth ,
  22 December 2014       Share Bookmark

Court :
Bombay High Court
Brief :
The Petitioner is an Indian citizen and a practicing Advocate. He claims to be affected by the levy of Service Tax on Advocates. It is the case of the Petitioner that section 65(105) (zzzzm) of the Finance Act, 1994 as inserted by the Finance Act 2009 and substituted by Finance Act 2011, proceeds to levy Service Tax on the Advocates. The understanding of the Petitioner and the association of advocates supporting him is that the amendment to Finance Act as referred above levies, assesses and recovers Service Tax from Advocates and that would be violative of the constitutional guarantee of justice to all. It is their submission that justice cannot be secured unless a cause or a legal proceeding is represented properly and effectively before a Court. It is the duty of the Advocates to represent the cause of the litigant before the Court of law to the best of their ability. It is submitted that the Advocates are engaged not only for aid and advice but also for appearance and representation of a case in Court. It is not possible for litigants to argue their cases before the Court of law because they may involve complicated factual and legal issues.
Citation :
P.C. Joshi – Appellant – Versus – Union of India – Respondent

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO.1927 OF 2011

 

P. C. Joshi,

Indian Citizen, A practicing Advocate

Having its office at 3, Prospect House,

29, Raghunath Dadaji Street, Fort,

Mumbai400001.

Petitioner

 

Versus

 

1) Union of India

Through the Secretary,

Ministry of Finance, Department

of Revenue, Government of India,

North Block, New Delhi110001.

 

2) The Director of General of Service Tax,

Having his office at Piramal Chambers,

Jijibhoy Lane, Parel (East),

Mumbai400012.

 

3) The Central Board of Excise and Customs,

Through its Chairman,

Department of Revenue, Ministry

of Finance, Having its office at

North Block, New Delhi 110001.

 

4) The Commissioner of Service Tax MumbaiI,

Having his office at 5th floor, Central

Excise Building, MaharshiKarve Road,

Churchgate, Mumbai400020.

 

5) Ministry of Law and Justice,

Government of India through Law

Secretary having his address at

4th floor, Shastri Bhavan,

New Delhi110001.

 

6) The Bar Council of Maharashtra & Goa,

Having their address at High Court

Extension, Fort, Mumbai 400032.

 

7) All India Federation of Tax Practitioners, an association registered under the

Bombay Public Trusts Act,

1950 having its office at

215, Rewa Chambers, 31,

New Marine Lines, Mumbai400020.

8) Sales Tax Tribunal Bar Association,

Room No.713/B, VikrikarBhavan,

Mazgaon, Mumbai400020.

 

Respondents

 

WITH

WRIT PETITION (L) NO.1764 OF 2011

1) Bombay Bar Association,

an association of persons, with its

premises at Room No.57, 3rd floor,

High Court, Dr. M. Kane Marg,

Mumbai400032.

 

2) MPS Rao,

Honorary Secretary,

Bombay Bar Association, with his

address at Room No.57, 3rd floor,

High Court, Dr. M. Kane Marg,

Mumbai4000032.

Petitioners

 

Versus

 

1) Union of India

Through the Secretary,

Ministry of Finance, Department

of Revenue, Government of India,

North Block, New Delhi110001.

 

2) The Director of General of Service Tax,

Having his office at Piramal Chambers,

Jijibhoy Lane, Parel (East),

Mumbai400012.

 

3) Ministry of Finance,

Department of Revenue,

Government of India, North Block,

New Delhi110001.

 

4) The Central Board of Excise and Customs,

Having its office at

North Block, New Delhi110001.

 

5) The Adocates' Association of Western India,

an association of persons having its

LCI Learning

office at Room No.36, 1st floor,

High Court, Mumbai400001,

through its President Rajiv

Patil.

 

6) The Bombay Incorporated Law Society,

an association of persons having its

office at 2nd floor, High Court, Annexe

Building, High Court, Mumbai400001,

through its PresidentDibnsooZaiwala.

Respondents

 

WITH

WRIT PETITION (L) NO.1808 OF 2011

 

1) Advocates Association of Western India,

an association of Persons through its

Secretary Mr. AnilkumarPatil,

Advocate, Having its address at

1st floor, Room No.36, High Court,

Bombay.

 

2) Shri Sanjeev M. Gorwadkar,

Advocate, Adult,

Indian Inhabitant, Having his

address at AAWI, Room No.36,

High Court, Mumbai.

 

3) SadashivDeshmukh,

Advocate, Adult,

Indian Inhabitant, having his

address at AAWI, Room No.36,

High Court, Mumbai.

Petitioners

 

Versus

 

1) Union of India

Through the Secretary,

Ministry of Finance, Department

of Revenue, Government of India,

North Block, New Delhi110001.

 

2) The Central Board of Excise and Customs,

Through its Secretary,

Having address at

North Block, New Delhi110001.

 

3) The Director General of Service Tax,

having his office at PiromalChembers,

Jijibhoy lane, Parel, Mumbai 400012.

 

4) Commissioner Service Tax,

Through its Secretary,

6th floor, 115, M.K. Road,

Churchgate, Mumbai400020.

Respondents.

...........

Mr. Sushant Murthy i/b. N. S. Thacker for the Petitioner in

W.P.No.1927/2011.

Mr. Rajiv Patil, Senior Counsel, with Mr. AmolMhatre, for the Petitioner in

W.P(L) No.1808/2011.

Mr. S. S.Pakale with Ms. SuchitraKamble for the Respondent Nos.1 to 4.

Mr. ParagVyas for the Respondent No.7.

Mr. DurgaprasadPoojary i/b. PDS Legal for the Respondent No.8 in

W.P.No.1927/2011.

Mr. for the Respondent.

...........

CORAM: S.C. DHARMADHIKARI

AND

A.A. SAYED, JJ.

RESERVED ON : 11th NOVEMBER, 2014

PRONOUNCED ON :15th DECEMBER, 2014.

JUDGMENT (PER S. C. DHARMADHIKARI, J.)

 

Rule. Respondents waives service. By consent, Rule made returnable forthwith.

 

2] By this Writ Petition under Article 226 of the Constitution of India, the Petitioner, a practicing advocate prays for the following reliefs:

 

“(a) Declare the impugned provisions in section 65(105)(zzzzm) of the Finance Act, 1994 as inserted by the Finance Act, 2011 as null and void and ultra vires the Constitution of India and/or section 66 of the Finance Act, 1994 and/or be pleased to strike down the said provisions as ultra vires,arbitrary and violative of Articles 13, 14, 19(1)(g), 246, 265and 268A of the Constitution of India.

 

(b) Issue a writ, order of direction in the nature of certiorari or any other writ, order or direction of like nature, quashing section 71(A)(5)(d) of the Finance Act, 2011.

 

(c) Issue a writ of mandamus, or a writ in the nature of mandamus, or any other appropriate writ, order or direction, restraining the Respondents themselves, by their servants, agents and subordinates from, directly or indirectly giving effect to or acting upon the impugned amendment or collecting Service Tax on the basis of section 65(105)(zzzzm) read with section 66 as substituted by Finance Act, 2011.

 

(d) In case the High Court is of the view that service tax is leviable on Advocates hold that the provisions of Rule 4A of the Service Tax Rules, 1994, provisions relating to levy of penalty under section 77 of the Finance Act, 1994 and prosecution under section 89 of the Finance Act, 1994 to the extent they are made applicable to Advocates for non-issue of invoices within14 days of the completion of service are ultra vires the FinanceAct, 1994 and Article 19(1)(g) of the Constitution of India.”

 

3] The reliefs are claimed in the following factual background. The Petitioner is an Indian citizen and a practicing Advocate. He claims to be affected by the levy of Service Tax on Advocates.

 

4] The Respondent before us is the Union of India and RespondentNos.2 and 4 are the officers of the Respondent No.1, for the administration of the provisions of the Finance Act, 1994 as amended. The 3rd Respondent is the Central Board of Excise and Customs whereas the 5th respondent is the Ministry of Law and Justice, Government of India. Respondent Nos.6, 7 and 8 are the Bar Council of Maharashtra and Goa, All India Federation of Tax Practitioners and Sales Tax Tribunal Bar Association. They claim to be affected by the imposition and levy of Service Tax on Advocates.

 

5] It is the case of the Petitioner that section 65(105) (zzzzm) of the Finance Act, 1994 as inserted by the Finance Act 2009 and substituted by Finance Act 2011, proceeds to levy Service Tax on the Advocates. The understanding of the Petitioner and the association of advocates supporting him is that the amendment to Finance Act as referred above levies, assesses and recovers Service Tax from Advocates and that would be violative of the constitutional guarantee of justice to all. It is their submission that justice cannot be secured unless a cause or a legal proceeding is represented properly and effectively before a Court. It is the duty of the Advocates to represent the cause of the litigant before the Court of law to the best of their ability. It is submitted that the Advocates are engaged not only for aid and advice but also for appearance and representation of a case in Court. It is not possible for litigants to argue their cases before the Court of law because they may involve complicated factual and legal issues. In such circumstances, when administration of justice is a sovereign and regal function of the State and Advocates are part of the same, then, they cannot be said to be rendering any service and of the nature envisaged by the Service Tax Act/Finance Act. Legal profession has not been understood from times immemorial as a profit making activity or venture. It is not a business or trade. It is a solemn duty which is performed for the litigants including the State who are major stakeholders in the judicial system. If, therefore, Advocates are approached by litigants so as to properly, completely and effectively represent them in the Court of law, then, a tax cannot be levied by the State on them. That would amount to denying the litigant access to justice. The guarantee of cheap, effective and expeditious justice to the common man is, thus, defeated.

 

To read the full judgment, please find the attached file :

 

Attached file:

http://bombayhighcourt.nic.in/generatenewauth.php?auth=cGF0aD0uL2RhdGEvanVkZ2VtZW50cy8yMDE0LyZmbmFtZT1PU1dQMTc2NDExLnBkZiZzbWZsYWc9Tg==

 
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Comments
10 years ago dr g balakrishnan

Advocate or the court is not concerned with govt revenue but just legal aspects only..see sec 138 r/w 142 NIA is moved on a cheque bounced cheque issuer by the holder of bounced cheque,the same section is not applied on govt when govt cheques bounce, like in agriculturists whose govt cheques bounced since no funds in the banks where the govt has account, why disparity in a democracy? how tolerated sir! see many agriculturists committed suicide latest one at delhi today in kejriwal land bill march talk at jantar mandir! law is always common otherwise that is no law but just some arbitrary action. why advocate is to be concerned or for that matter why the very court!


10 years ago dr g balakrishnan

Joshi has a right even to move a writ under Art 32 before SC to get redress, after all advocate is a court officer under Advocates Act is it not!


10 years ago dr g balakrishnan

i would advice mr joshi to move SLP before SC for due consideration as the HC did not view a solid fact and aspect of law, see, sir, when all are equal, why there is a disparity between general category of candidates, and other categories called OBCs, BCs, SCs/STs, ON WHAT principle there is equality and equity in the classification of people, and merit too just discounted when reservation idea is reinforced.


10 years ago dr g balakrishnan

service means any service public servant is doing service to the master called the government and indeed he is paid salaries for services rendered as per rates and scales prescribed y pay commission but no advocates fee could be prescribed by any pay commission as no client would pay the advocate is the reality and a fact to be reckoned with by judiciary being justice delivering authority is my view.


10 years ago dr g balakrishnan

unfortunately, the petitioner did not tell the court, that advocates being the court officers they are comparable to public servants without any monthly salary obtained from the exchequer of government is indeed clear and besides no advocate is paid by the client the service tax component which is now about 14 % or so a large chunk which advocate has to pay to the government under head 'service tax',besides when he has to pay about 14% is cut into his normal revenue by fees paid by the client, as client never pays service tax component to the advocate besides, and as such, advocates income is badly affected when the cost of his services to the client generally are indeed very badly affects his income, besides, there is no guarantee advocate could earn like CA/Mgmt consultant or Engineers who are paid very much higher by any corporate and they are basically engaged by corporate only. in the circumstance advocate could be compared to a public servant who draws regular salaries monthly from governments concerned, so he could be compared with public servants sans monthly salary paid as per pay commissions appointed by governments,so if service tax is made applicable to advocates, then naturally every public servant also be made liable to pay service tax then there would be some meaningful equality and equity could be established,after all equality and equity is common among more or less equals only not incomparables, is it not? so service tax might be made applicable on all public servants too is meaningful equity, is my view or had i been on the bench i would have viewed even in the absence of petitioner duly presenting the case being a constitutional court!


10 years ago hisifybird

Are the lawyers exempted from Service Tax or not?


10 years ago N.K.Assumi

Nice Judgment.


10 years ago Dipakkumar J Shah

No end of appeals till you die. U may not get Justice , may be!!!!! Ha Ha Ha.


10 years ago kishor kr. majumder

good judgement


10 years ago Prof Wg Cdr G Kumar

Supreme Court Rules 2013 do not allow a Petitioner in-Person to argue his matter unless he/she has been interviewed by Registrar (Supreme Court) and found fit to assist the Court, and then specifically permitted by a Bench of the Supreme Court. Until he/she is so permitted, his/her matter will not be listed -- hence, the pleadings filed by him/her will also be infructuous. If he/she is not permitted to argue in person AND is also found to meet the criteria laid down by Supreme Court Legal Services Committee, only then he/she will be provided an Amicus Curiae. But if he/she cannot meet the said criteria, then he/she shall have to hire the services of an Advocate-on-Record. Compliance of these Rules not only further delays Justice, but also denies Justice to him/her if he/she is not financially in a position to afford a good Lawyer and does not also meet the aforesaid criteria. There is no exemption from the above procedures even for retired Judges and practising Advocates (including those who have left active practice as Advocates-on-Record) if they wish to appear in-person! This reflects adversely upon the drafting skills of those who penned these Rules. Incidentally, Supreme Court Rules are approved by the Full Court, and then assented to by the President of the Republic of India. Then how can such far reaching Amendments to Constitution be left in the hands of the same draftsmen (e.g. the virtual Amendments regarding Appointment, Transfer and Salaries of Judges) WHEREAS such Amendments can only be made if the same are passed by thousands of the Members of Parliament and State Legislatures (Members of Lok Sabha, Rajya Sabha and Assemblies/ Councils of half the States in the Union of India)? What about the non-transparent procedure for selection of Judges? One of the Judges (now retired) selected by the ‘Collegium of 5 Senior Most Judges’ had declared a living person (described in the said Order as “an Advocate of this Court”) also as ‘dead’.


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