Bombay High Court dismisses writ petition challenging levy of service tax on advocates

A Division Bench of the Bombay High Court comprising of A.A. Sayed and S.C. Dharmadhikari, JJ, has dismissed a writ Petition filed by an advocate, P.C. Joshi, challenging the levy of service-tax on advocates vide Section 65(105)(zzzzm) of the Finance Act as inserted by the Finance Act 2009 and substituted by the Finance Act, 2011 as ultra vires the Constitution of India   and/or   section   66   of the   Finance   Act,   1994. 

Bombay High Court

The petitioner contended in the writ petition that an advocate renders services which cannot be said to be commercial or business like. They cannot be equated with the service providers mentioned in the Finance Act 1994. It was also contended that advocacy is not a business but a profession and a noble one. An advocate is a part and parcel of the administration of justice and which is a sovereign or regal function and hence providing for a Service Tax on advocates would mean that their services will no longer be available or accessible to those seeking justice from a Court of law. That would defeat the constitutional guarantee of free, fair and impartial justice. Attacking the amendment on the ground of violation of Article 14 of the Constitution, the petitioner said that the said amendment discriminates between representation made on behalf of an individual and representation made on behalf of a business entity. 

The Union of India contended that  by   the   constitutional   provision,   namely,   Article 19(1)(g)  there is a right  to practice any profession, or to carry on any occupation, trade or business, however, this is subject to the reasonable restriction which has been prescribed by Article 19(6). Therefore, it is not an absolute right   but   subject   to   reasonable   restrictions. The imposition of service tax does not restrict a person from exercising his right to carry on any profession, trade or occupation.

The Bombay High Court dismissing the Petition held¹ inter alia, that:

(i) The legislature has neither interfered with the role and function of an advocate nor has it made any inroad and interference in the constitutional guarantee of justice to all. The services provided to an individual client by a individual advocate continues to be exempted from the purview of the Finance Act and consequently Service Tax, but when an individual advocate provides service or agrees to provide services to any business entity located in the taxable territory, then, he is included and liable to pay Service Tax. The classification between those who can afford professional legal services and are ready to pay the fees or charges demanded without seeking any reduction or concession and those who cannot pay legal fees but can at best bear meagre expenses has been made. This classification has a reasonable nexus with the object sought to be achieved. 

(ii) The economic realities are that even, legal services are rendered in an organized manner. When advocates group or organize themselves by making huge investments in acquiring immovable properties for professional work, heavy overheads, in the form of clerical and support staff, with facilities of cabins or rooms, then, legal services are rendered to organized groups or business entities predominantly. These persons can very well pay the fees and charges without any demur or complaint;

(iii) Relying on the dictum laid down in All India Federation of Tax Practitioners V/s. Union of India² the Court held that what holds good for chartered accountants and architects must equally apply to other professionals such as advocates, and who too are well conscious of their status.

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1. Writ Petition No.1927 of 2011 decided on December 15, 2014

2. (2007) 7 SCC

CPI State Secretary Pannian Raveendran files writ petition challenging maintainability of a complaint before the Kerala Lok Ayukta seeking inquiry into the allegation of corruption levelled against party leaders in connection with Bennet Abraham's candidature

State secretary of the Communist Party of India, Mr. Pannian Raveendran on Tuesday filed a writ petition in the Kerala High Court challenging the maintainability of a complaint before the Kerala Lok Ayukta seeking an inquiry into the allegation of corruption levelled against party leaders in connection with the fielding of Bennet Abraham as its candidate in the Thiruvananthapuram Lok Sabha constituency and the consequential Lok Ayukta order directing an investigation by the Inspector General of Police into the said allegations. He pointed out that the Lok Ayukta had dismissed his plea against the maintainability of the complaint.

CPI State Secretary, Pannian Raveendran

The investigation officer had now directed the petitioner to produce certain documents before him on December 19, averred Mr. Raveendran in his writ petition. Mr. Raveendran said the complaint pending before the Lok Ayukta was not at all maintainable in law.

The petitioner, Mr. Pannian Raveendran said the Kerala Lok Ayukta Act 1999 did not empower the Lok Ayukta to inquire into the internal affairs of a political party. The purpose of the Act was to inquire into the actions taken by the government or public authorities or public servants.

He also pointed out that, in fact, the petitioner did not come under the definition of a public servant under the Prevention of Corruption Act as he was not a government employee or discharging any public duty as defined in the Act.

That apart, it was absolutely clear that the candidature of Mr. Abraham had been decided by the State Council of the CPI. Therefore, the petitioner or other respondents could not legally be made accountable.

As per the constitution of the party, the State secretary was one of the members of the secretariat of the party. He could not exercise any independent power. He needed to implement the decision of the party’s highest decision-making body only.

The writ petition is expected to come up for admission before the Kerala High Court today.