The Bombay High Court has granted the stay on the service tax demand to Advocate for granting legal services for the financial year 2014-15.
The petitioner, Sanjiv Madhusudan Shah challenged the show cause cum demand notice issued by the Assistant Commissioner of Central Goods and Services Tax (CGST), Mumbai West seeking to levy service tax upon the petitioner for the financial year 2014-15.
The petitioner is an advocate by profession. The Central Government has issued several exemption notifications whereby services provided by an individual as an advocate or as a partnership firm of advocates by way of legal services are exempt from the charge of service tax.
There is a provision for recovering service tax from the service recipient. The petitioner accordingly contended that the impugned show cause cum demand notice has been issued mechanically.
The petitioner argued that he was a practicing advocate registered under the head of “legal consultancy service” providing only legal services and no other services. He claimed to have paid the service tax on “forward charge” basis till 2012 until the notification for “reverse charge” was issued under erstwhile service tax regime.
Considering the submissions of the petitioner, the division bench consisting of Justice Ujjal Bhuyan and Milind N. Jadhav while granting the interim measure, stayed the impugned show cause cum demand notice and listed the matter on March 15, 2021.
It is pertinent to mention here that the Supreme Court had, in January 2018, stayed the proceedings in Delhi and Chhattisgarh High Courts which had challenged applicability of service tax on lawyers. The cases pending in the those High Courts were transferred to the Supreme Court.
Interestingly, current Attorney General KK Venugopal had, in 2015 appeared on behalf of a lawyers association and secured a stay on levy of service tax on lawyers before the GST regime came into force.
It may be noted that under GST regime also legal services by all lawyers, law firms and Senior Advocates are covered under reverse charge mechanism. For details Click Here.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
