Legal Services Provided By Individual Advocate Or A Partnership Firm Of Advocates Are Exempted From Levy Of Service Tax: Bombay HC

The Bombay High Court held that the legal services provided by an individual Advocate or a partnership firm of Advocates are exempted from levy of service tax.

The Court held thus in a writ petition filed by a female Advocate against the order of the Deputy Commissioner, CGST (Central Goods and Services Tax) and C. Excise, Raigad by which an amount of Rs. 35,82,298 towards service tax under Section 73(1) of the Finance Act, 1994 read with Section 174 of CGST Act, 2017 was ordered to be recovered from the petitioner Advocate with interest and penalty.

A Division Bench comprising Justice G.S. Kulkarni and Justice Kishore C. Sant observed, “It is thus clear that as set out in the Notification, the taxable service in respect of services provided or to be provided by the individual advocate for a firm of advocates has been set out to be ‘Nil’. Similarly Notification No.25/2012 dated 20th June, 2012, also clearly provides that the service provided by an individual advocate, partnership firm of advocates, by way of legal services being exempted from levy of service tax.”

Advocate Chetan Kapadia appeared for the petitioner while Advocate Sangeeta Yadav appeared for the respondents.

In this case, the petitioner Advocate contended that the Deputy Commissioner had acted in patent lack of jurisdiction and that there were several procedural illegalities, amounting to a breach of the principles of natural justice. She further contended that an email was received by her to attend a hearing and she appeared through her Chartered Accountant (CA). Thereafter, she addressed a letter to the Designated Officer attaching an email which merely referred to the show-cause notice which was never received by her.

It was recorded that even the CA who represented her was not furnished a copy of the show-cause notice, as also the website referred only to the personal hearing letter. It was pointed out that neither Service Tax nor GST were applicable and payable by advocates and hence, any attempt to pass an order would be without jurisdiction. It was contended that on such backdrop instead of proceedings being dropped on January 9, 2024, she by email received the impugned order dated October 26, 2023 and it is in such backdrop that the petition was filed before the court.

The High Court after hearing the contentions of the counsel noted, “… certainly the Designated Officer has acted without jurisdiction having acted contrary to the binding notifications. … We may observe that the notifications which are now placed for consideration of the Court are absolutely clear, they were not the subject matter of consideration in the case of Isha Kiran Jain (cited supra).”

The Court said that no useful purpose would be achieved in present proceeding remanding to the Designated Officer as the same acted without jurisdiction.

Accordingly, the High Court allowed the petition and quashed the impugned order.

Cause Title- Adv. Pooja Patil v. The Deputy Commissioner, CGST and CX Division VI, Raigad Commissionerate & Ors. (Neutral Citation: 2024:BHC-AS:5388-DB)

Appearance:

Petitioner: Advocates Chetan Kapadia and Ruturaj Pawar.

Respondents: Advocates Sangeeta Yadav and Ashutosh Mishra.

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