Sriharsha K Desai vs. Union Of INDIA
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Before: SMT. VAISHALI HEGDE, ADV.)
The petitioner has sought for setting aside the order in original at Annexure-K as well as recovery notice at Annexure-G.
It is the case of the petitioner that he is a practicing advocate and that demand was raised against him and order passed in original at Annexure-K, wherein it NC: 2024:KHC:24101 TAX (D.D. ON 22.04.2024) and submits that the legal question regarding the service by advocates is declared to be one that is not taxable and accordingly the order may be passed in the present matter also, setting aside the order in original by taking note of the law laid down. Learned Senior Counsel further submits that the petitioner has no other source of income and a memo has been filed by the petitioner to such effect dated 28.06.2024, which is also taken note of.
This Court in and Connected Matters has observed that the service of a practicing advocate as also that of Senior Counsel does not fall within the purview of service tax. The relevant observations are as follows:
“6. In terms of Notification No. 25/2012-ST dated 20.06.2012 passed in exercise of power under Section 93 (1) of the Finance Act, 1994 the Central Government has exempted certain taxable services from the whole of the service tax leviable under Section 66B of the Finance Act, 1994. Amongst the services exempt, it includes services NC: 2024:KHC:24101 of legal professionals consisting of Partnership Firm of Advocates or an individual Advocate other than a Senior Advocate. Clause 6(b) of the Exemption Notification No.24/2012-ST dated 20.06.2012 provides as follows: "(b) a partnership firm of Advocates or an individual as an advocate other than a senior advocate, by way of legal services to - (i) an advocate or partnership firm of advocates providing legal services; (ii) any person other than a business entity; or (iii) a business entity with a turn over up to rupees ten lakh in the preceding Financial Year;"
Even where individual advocates or partnership firm of advocates who fall outside the exemption under the Notification 25/2012-ST, the person liable to pay service tax is the recipient of the service.
In terms of Notification No.30/2012-ST dated 20.06.2012, liability is imposed as follows: NC: 2024:KHC:24101 " … The Central Government hereby notifies the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the sub-section, namely: - I. xxx II. The extent of service tax payable thereon by the person who provides the service and any other person liable for paying service tax for the taxable services specified in paragraph I shall be specified in the following table, namely:- Sl.No. Description of a service Percentage of Service Tax Percentage of Service Tax
Payable by the person providing the service Payable by the person receiving the service 5 In respect of services provided or agreed to be provided by individual Advocate or a Firm of Advocates by way of legal services, directly or indirectly NIL 100%
In the case of Senior Advocates it is to be noted that Rule 2 of the Service Tax Rules, NC: 2024:KHC:24101 Clause (d) provides for "person liable for paying service tax" and lists out at Clause (DD) as follows: “(DD) in relation to service provided or agreed to be provided by a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, and the senior advocate is providing such services, the recipient of such services, which is the business entity who is litigant, applicant, or petitioner, as the case may be.” Accordingly, it is clear that where Senior Counsel are engaged, the obligation to pay service tax is on the recipient of such services. If that were to be so, there is no obligation on the Senior Counsel to pay service tax.
In light of the above, individual lawyers and Partnership of firm of Advocates, Senior Advocates are exempted from payment of service tax under certain circumstances.” NC: 2024:KHC:24101
In light of the position of law laid down above, in the present petition also noticing that the nature of activity of the petitioner being an advocate practicing with profession with no other source of income as is evidenced from the memo filed, petition is liable to be allowed and the order in original at Annexure-K and the recovery notice at Annexure-G are set aside.
Accordingly, writ petition stands disposed off. JUDGE NC CT:bms List No.: 1 Sl No.: 17
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.