Shri. Akhilesh Kumar Sah, Advocate, has analyzed the controversy relating to the imposition of service-tax on Advocates and explained the contrasting view points of the contesting parties
The Hon’ble Supreme Court Of India on 10.08.2015 in Bombay Bar Association vs. Union of India & Ors. [Petition(s) for Special Leave to Appeal (C)….CC No(s). 13944/2015 (Arising out of impugned final judgment and order dated 15/12/2014 in WPL No.1764/2011 passed by the High Court of Bombay)], has held that until further orders, there shall be interim stay of the operation and implementation of the impugned final order and judgment passed by the High Court of Judicature at Bombay in W.P.(L) No.1764 of 2011, dated 15.12.2014.
Earlier, in P. C. Joshi, Vs. Union of India And Others[Writ Petition No.1927 OF 2011 with Writ Petition (L) NO.1764 OF 2011, Writ Petition (L) NO.1808 OF 2011, Judgment Pronounced on: 15th December, 2014] the petitioner being an Indian citizen and a practicing Advocate claimed to be affected by the levy of Service Tax on Advocates. It was the case of the Petitioner that section 65(105) (zzzz) 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 was 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 was 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 was submitted that the Advocate 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. The learned counsel on behalf of the Petitioner Mr. Thacker, besides other submissions in the case, placed reliance upon the following judgments:
1) D. P. Chadha vs. Triyugi Narain Mishra and others reported in (2001) 2 Supreme Court Cases 221;
2) All India Federation of Tax Practitioners and others vs. Union of India and Others reported in (2007) 7 Supreme Court Cases 527;
3) Tamil Nadu Kalyana Mandapam Assn. vs. Union of India reported in 2004(167) E.L.T. (S.C.);
4) The Bar Council of Maharashtra vs. M. V. Dabholkar and Others reported in (1976) 2 Supreme Court Cases 291;
5) State of Maharashtra vs. Manubhai Pragaji Vashi and others reported in (1995) 5 Supreme Court Cases 730;
6) Manoharan vs. Sivarajan and others reported in (2014) 4 Supreme Court Cases 163;
7) All India Sainik Schools Employees’ Association vs. Defence Minister cum Chairman Board of Governors, Sainik Schools Society, New Delhi and others reported in 1989 Supp (1) Supreme Court Cases 205;
8) Uttar Pradesh Power Corporation Limited vs. Ayodhya Prasad Mishra and another reported in (2008) 10 Supreme Court Cases 139; and
9) Premchand Somchand Shah and another vs. Union of India and another reported in (1991) 2 Supreme Court Cases 48
On the other hand, the Learned Counsel Mr. Pakale, appearing on behalf of the Union of India, besides other relevant submissions, case laws, submitted that the imposition of a tax including Service Tax does not restrict a person from exercising his right to carry on any profession, trade or occupation. In the present case an advocate is not prevented or prohibited from carrying on his professional activities simply because he is required to pay taxes. The advocates are paying taxes on their income (income tax, paying taxes on their profession/professional tax). They are also paying tax to statutory authorities and public bodies such as the Municipalities, Panchayat. Therefore, different types of taxes and which are levied, assessed and recovered does not impair the exercise of the right conferred by Article 19(1)(g) of the Constitution of India. This fundamental right being subjected to a reasonable restriction by the constitution itself, none of the Petitioners can complain. The tax cannot be said to be unconstitutional, Mr. Pakale submitted that the restriction to pay tax cannot be said to be unreasonable. It is in these circumstances that the challenge must fail. The Learned Counsel on behalf of Union of India also relied upon the judgment of the Hon’ble Supreme Court in the case of M.A. Rehman vs. State of Andhra Pradesh reported in AIR 1961 SC 1471, K. M. Mohamad Ahdul Khader Firm vs. State of Tamil Nadu reported in AIR 1985 Supreme Court 12,Federation of Hotel and Restaurant vs. Union of India and others reported in AIR 1990 SC 1637.
The Learned Judges of the Bombay High Court on the facts and circumstances, held that we do not find that levy of service tax on a limited category and class of professionals namely Advocates, the burden of which does not fall on them but on the receiver of the service, can be said to be violative of the guarantee or right under article 19(1)(g) of the Constitution of India. The Learned Judges of the Bombay High Court after analyzing the issues, rival submissions of the counsels, case laws dismissed the petitions with no orders as to costs.
Bottom line:
The assistance rendered by Advocates is to bring in harmony and peace in the society and resolve disputes between the parties, the profession of advocates is a noble profession and opposition of service-tax on advocates is unjustified.
The nobility (or, indeed, the common lack of it) underlying any service is absolutely irrelevant to the issue and just cannot have any bearing whatsoever on its taxability.
THE HONEY DROP TAXING ONLY BE PERMITTED. WHICH IS SAID BY THE ” GURU CHANKYA”.
today taxation is it some honey drop!
In the Bottomline- There is ‘Imposition’ instead of ‘Opposition’.
sirs, indian tax laws are indeed one sided, like one way street.
i raise a question here,lawyers pay income tax on their income,also meet several indirect taxes like anyone.
i raise here a question how many taxes the citizens need o pay, if the government is incompetent to live within its means.
could you allow yourself to be profligate at the cost of others? why the hon Bombay high court did not question the government of India?
After all it was dealing a judicial review under art 14 r/w art 226?
it is obligatory for the hon court to question on the propriety of tax structures, it cannot just docile way just accept an and every statute passed by government with the help of law makers.
if so what is the meaning of judicial review sirs?
so the honorable supreme court rightly stayed the high court judgement, here in this case where the matter of service tax on advocates is questioned, might be on a limited case of advocates.
why at all service tax need be is the major thought that need to be addressed ..14.5% of service tax liability really bulges the costs of any service as such, to that extent, as there are a lot of indirect taxes are levied on several materials commodities, goods, services, that means consumers including common man faces such incidences of taxes,while he cannot meet the both ends, what is the great thing the government did over several years of service tax regime.
without the service tax element, whether the government could not have done some great work, is a pertinent question need be raised, and answered properly by the government of india…we need not just over appreciate the finance ministers for their a lot of futile work they turned out so far.
further if you pay tax – direct or indirect you as a citizen participate like a lender of finances like a banker to the government, when so the taxpayer need be given relevant interest rate might be notional too every year by the governments, there is no free lunch to government too.
besides governments revenue levies penalties and fines on tax payers for delay in payment of taxes where is the rule of law that robber can fine you if you have not brought enough to being robbed.
today irresponsible taxing is subject to art 265 of the constitution of india means it is not what statutes that governments pass with the help of law makers who may be illiterates as there is no mandate every law maker should be a great economist or lawyer, sociologist, but leverage gives leverage to public servants assisting the minister to prepare bills to be made acts by law makers once the so called minister tables the bills. that way only the service tax act came into being,like all other bills on taxes.
so it is vital all such aspects need be considered certainly not some limited issues only as service taxing need be tested on the anvils of constitution as also very many factors as it is a matter of judicial review, that might cause quashing the very service tax altogether as it is causing severe burden on consumers of services, as no service provider would pay from his own pocket, that is a major point. for consideration. as so many impositions of taxes raises the costs of goods and services that aspect need be considered, apart from the petitioners plea only.
again advocates services are not some typing services, or some soft ware services, but he has to hep the litigants to fight their matters as the litigants only might know that they are unnecessarily harassed, but they do not know how to protect themselves,naturally it is basic responsibility of the state or the nation need to protect the unnecessarily accused persons or victims of circumstances, so asking service tax on lawyers if imposed the cost for litigants would shoot up by 14.5% or so that is essential to be considered by the court, not just supporting some bland worthless statutes passed by any government is the vital consideration before the court. that consideration is called judicial review sirs.
so it is prudent on the part of hon supreme court to stay and realistically assess the very statute of any taxation is a welcome proposition, as high court acted like some quasi judicial body does in any case , but high court is the constitutional court that need to study every aspect thread bare, it is not concerned with the aspect whether government gets revenue or not, or sustains losses.
that is called justice delivery system expected of any high court.
high court is not some administrator but just a judiciary that needs to consider every aspect of a case threadbare and arrive at a conclusion, is my considered view.
Difficult understand how -logically or in the constitutional sense-legal services will claim exclusive monopoly to ‘benefit ” the society such that other services do/ can not not “benefit”the society or are “less noble”.Perhaps the judges-who were once lawyers- will know
Check bottom line – Opposition or Imposition?