Mr. Rajamuri Venkata Rama Reddy vs. The Assistant Commissioner Of Central Tax

Held

The Court held that the impugned order, to the extent it imposed liability for service tax on income received from the legal profession, was not sustainable. The Court noted that the Government of India had issued specific notifications under the GST law (notifications 12 and 13 of 2017) and the Service Tax law (notifications 25 and 30 of 2012) that exempted lawyers from the purview of service tax and GST. This fact was not controverted by the revenue. The Court also observed that the authorities had proceeded based on information from the Income Tax Department and that the petitioner's claim of not receiving any notice was not effectively rebutted by the revenue. Given these circumstances, the Court found the impugned order unsustainable and accordingly set it aside. The writ petition was allowed to the extent of quashing the order concerning service tax on income from the legal profession.

Facts

The petitioner, Mr. Rajamuri Venkata Rama Reddy, an advocate, filed a writ petition challenging an order in original passed by the Assistant Commissioner of Central Tax. This order held the petitioner liable to pay service tax on income earned from his legal profession. The petitioner contended that notifications issued under the Finance Act, 1994, and the Central Goods and Services Tax (CGST) Act, 2017, specifically exempted lawyers from service tax and GST. The petitioner also claimed that no proper notice was served before the impugned order was passed. The revenue authorities were unable to establish the due service of any alleged notices. The petitioner's income tax returns and chartered accountant's audit report confirmed his income was solely from his legal profession.

Key Issues

1. Whether the impugned order, which levies service tax on income derived from the legal profession, is sustainable in light of the relevant exemption notifications under the Finance Act, 1994, and the CGST Act, 2017 (specifically referencing notifications 12 and 13 of 2017 under GST law and notifications 25 and 30 of 2012 under Service Tax)? Petitioner's arguments: The petitioner argued that the Government of India itself had issued specific notifications exempting lawyers from service tax and GST. Therefore, levying service tax on his income from the legal profession was contrary to these exemptions. Revenue's arguments: The revenue's counsel was unable to controvert the petitioner's claim regarding the exemption notifications. Furthermore, the revenue's counsel could not establish whether the alleged notices issued to the petitioner were duly served.