Bombay HC Rejects Writ Against Levy of Service Tax on Advocates

Bombay HC Rejects Writ Against Levy of Service Tax on Advocates

The Bombay High Court did not entertain a writ filed in the court by an advocate to challenge the Government’s decision to bring the advocates under the tax net. An advocate had filed a petition in the High Court at Bombay challenging the imposition of service tax on advocates practicing in India. The outcome of the High Court’s ruling is that business clients of law firms as well as individual advocates will be paying a service tax as usual as per the Finance Act.

Bombay HC Rejects Writ Against Levy of Service Tax on Advocates

The main arguments of the advocates who had petitioned the High Court in Mumbai was that advocates are officers of the court and do make their appearance and representation in the court in a case. They are not just engaged to offer aid and advice to their clients. The advocates also argued in the High Court that administration of justice is “a regal and sovereign function of the State” and they are part of the same. Hence, the advocates should not be taxed for providing any service or that that has been envisaged in the finance Act.

The advocates quoted that service tax is a value added tax that is levied on the value addition made as a result of rendition of the service. They feel that representing a case of their client in the court does not account as value addition and hence they should be spared from the service tax net.

The petitioners who filed a petition in the High Court or reversal of the service tax on advocates included: Advocates of Bombay Bar Association, Advocates Association of western India, PC Joshi, MPS Rao and others. The advocates who appeared for the respondents in the case were: advocates Suchitra Kamble, SS Pakale and Durgaprasad Poojary from PDS Legal and the advocates who represented the petitioner in the Bombay High Court were: advocates NS Thacker, Sushant Murthy, Amol Mhatre as well as Senior Counsel Rajiv Patil.

The two judge High Court Bench comprising of Justices SC Dharmadhikari and AA Sayed opposed the arguments made on behalf of the petitioners and said that lawyers do provide service to  their clients and are duly compensated or the service to  the clients that is collected by them in the form of fees. The court also said that like any other service provider, lawyers these days also try out various marketing and advertising to brand themselves as exclusive and specialized lawyers in Corporate Law, property rights, divorce law and so on. They are now not just catering to individuals, but also to business entities.

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