Whether levy of service-tax on Advocates is Constitutional – Article 19(1)(g)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO.1927 OF 2011

P. C. Joshi,

Indian Citizen, A practicing Advocate

Having its office at 3, Prospect House,

29, Raghunath Dadaji Street, Fort,

Mumbai400001.

Petitioner

Versus

1) Union of India

Through the Secretary,

Ministry of Finance, Department

of Revenue, Government of India,

North Block, New Delhi110001.

2) The Director of General of Service Tax,

Having his office at Piramal Chambers,

Jijibhoy Lane, Parel (East),

Mumbai400012.

3) The Central Board of Excise and Customs,

Through its Chairman,

Department of Revenue, Ministry

of Finance, Having its office at

North Block, New Delhi 110001.

4) The Commissioner of Service Tax MumbaiI,

Having his office at 5th floor, Central

Excise Building, MaharshiKarve Road,

Churchgate, Mumbai400020.

5) Ministry of Law and Justice,

Government of India through Law

Secretary having his address at

4th floor, Shastri Bhavan,

New Delhi110001.

6) The Bar Council of Maharashtra & Goa,

Having their address at High Court

Extension, Fort, Mumbai 400032.

7) All India Federation of Tax Practitioners, an association registered under the

Bombay Public Trusts Act,

1950 having its office at

215, Rewa Chambers, 31,

New Marine Lines, Mumbai400020.

8) Sales Tax Tribunal Bar Association,

Room No.713/B, VikrikarBhavan,

Mazgaon, Mumbai400020.

Respondents

WITH

WRIT PETITION (L) NO.1764 OF 2011

1) Bombay Bar Association,

an association of persons, with its

premises at Room No.57, 3rd floor,

High Court, Dr. M. Kane Marg,

Mumbai400032.

2) MPS Rao,

Honorary Secretary,

Bombay Bar Association, with his

address at Room No.57, 3rd floor,

High Court, Dr. M. Kane Marg,

Mumbai4000032.

Petitioners

Versus

1) Union of India

Through the Secretary,

Ministry of Finance, Department

of Revenue, Government of India,

North Block, New Delhi110001.

2) The Director of General of Service Tax,

Having his office at Piramal Chambers,

Jijibhoy Lane, Parel (East),

Mumbai400012.

3) Ministry of Finance,

Department of Revenue,

Government of India, North Block,

New Delhi110001.

4) The Central Board of Excise and Customs,

Having its office at

North Block, New Delhi110001.

5) The Adocates' Association of Western India,

an association of persons having its

office at Room No.36, 1st floor,

High Court, Mumbai400001,

through its President Rajiv

Patil.

6) The Bombay Incorporated Law Society,

an association of persons having its

office at 2nd floor, High Court, Annexe

Building, High Court, Mumbai400001,

through its PresidentDibnsooZaiwala.

Respondents

WITH

WRIT PETITION (L) NO.1808 OF 2011

1) Advocates Association of Western India,

an association of Persons through its

Secretary Mr. AnilkumarPatil,

Advocate, Having its address at

1st floor, Room No.36, High Court,

Bombay.

2) Shri Sanjeev M. Gorwadkar,

Advocate, Adult,

Indian Inhabitant, Having his

address at AAWI, Room No.36,

High Court, Mumbai.

3) SadashivDeshmukh,

Advocate, Adult,

Indian Inhabitant, having his

address at AAWI, Room No.36,

High Court, Mumbai.

Petitioners

Versus

1) Union of India

Through the Secretary,

Ministry of Finance, Department

of Revenue, Government of India,

North Block, New Delhi110001.

2) The Central Board of Excise and Customs,

Through its Secretary,

Having address at

North Block, New Delhi110001.

3) The Director General of Service Tax,

having his office at PiromalChembers,

Jijibhoy lane, Parel, Mumbai 400012.

4) Commissioner Service Tax,

Through its Secretary,

6th floor, 115, M.K. Road,

Churchgate, Mumbai400020.

Respondents.

...........

Mr. Sushant Murthy i/b. N. S. Thacker for the Petitioner in

W.P.No.1927/2011.

Mr. Rajiv Patil, Senior Counsel, with Mr. AmolMhatre, for the Petitioner in

W.P(L) No.1808/2011.

Mr. S. S.Pakale with Ms. SuchitraKamble for the Respondent Nos.1 to 4.

Mr. ParagVyas for the Respondent No.7.

Mr. DurgaprasadPoojary i/b. PDS Legal for the Respondent No.8 in

W.P.No.1927/2011.

Mr. for the Respondent.

...........

CORAM: S.C. DHARMADHIKARI

AND

A.A. SAYED, JJ.

RESERVED ON : 11th NOVEMBER, 2014

PRONOUNCED ON :15th DECEMBER, 2014.

JUDGMENT (PER S. C. DHARMADHIKARI, J.)

Rule. Respondents waives service. By consent, Rule made returnable forthwith.

2] By this Writ Petition under Article 226 of the Constitution of India, the Petitioner, a practicing advocate prays for the following reliefs:

“(a) Declare the impugned provisions in section 65(105)(zzzzm) of the Finance Act, 1994 as inserted by the Finance Act, 2011 as null and void and ultra vires the Constitution of India and/or section 66 of the Finance Act, 1994 and/or be pleased to strike down the said provisions as ultra vires,arbitrary and violative of Articles 13, 14, 19(1)(g), 246, 265and 268A of the Constitution of India.

(b) Issue a writ, order of direction in the nature of certiorari or any other writ, order or direction of like nature, quashing section 71(A)(5)(d) of the Finance Act, 2011.

(c) Issue a writ of mandamus, or a writ in the nature of mandamus, or any other appropriate writ, order or direction, restraining the Respondents themselves, by their servants, agents and subordinates from, directly or indirectly giving effect to or acting upon the impugned amendment or collecting Service Tax on the basis of section 65(105)(zzzzm) read with section 66 as substituted by Finance Act, 2011.

(d) In case the High Court is of the view that service tax is leviable on Advocates hold that the provisions of Rule 4A of the Service Tax Rules, 1994, provisions relating to levy of penalty under section 77 of the Finance Act, 1994 and prosecution under section 89 of the Finance Act, 1994 to the extent they are made applicable to Advocates for non-issue of invoices within14 days of the completion of service are ultra vires the FinanceAct, 1994 and Article 19(1)(g) of the Constitution of India.”

3] The reliefs are claimed in the following factual background. The Petitioner is an Indian citizen and a practicing Advocate. He claims to be affected by the levy of Service Tax on Advocates.

4] The Respondent before us is the Union of India and RespondentNos.2 and 4 are the officers of the Respondent No.1, for the administration of the provisions of the Finance Act, 1994 as amended. The 3rd Respondent is the Central Board of Excise and Customs whereas the 5th respondent is the Ministry of Law and Justice, Government of India. Respondent Nos.6, 7 and 8 are the Bar Council of Maharashtra and Goa, All India Federation of Tax Practitioners and Sales Tax Tribunal Bar Association. They claim to be affected by the imposition and levy of Service Tax on Advocates.

5] It is the case of the Petitioner that section 65(105) (zzzzm) of the Finance Act, 1994 as inserted by the Finance Act 2009 and substituted by Finance Act 2011, proceeds to levy Service Tax on the Advocates. The understanding of the Petitioner and the association of advocates supporting him is that the amendment to Finance Act as referred above levies, assesses and recovers Service Tax from Advocates and that would be violative of the constitutional guarantee of justice to all. It is their submission that justice cannot be secured unless a cause or a legal proceeding is represented properly and effectively before a Court. It is the duty of the Advocates to represent the cause of the litigant before the Court of law to the best of their ability. It is submitted that the Advocates are engaged not only for aid and advice but also for appearance and representation of a case in Court. It is not possible for litigants to argue their cases before the Court of law because they may involve complicated factual and legal issues. In such circumstances, when administration of justice is a sovereign and regal function of the State and Advocates are part of the same, then, they cannot be said to be rendering any service and of the nature envisaged by the Service Tax Act/Finance Act. Legal profession has not been understood from times immemorial as a profit making activity or venture. It is not a business or trade. It is a solemn duty which is performed for the litigants including the State who are major stakeholders in the judicial system. If, therefore, Advocates are approached by litigants so as to properly, completely and effectively represent them in the Court of law, then, a tax cannot be levied by the State on them. That would amount to denying the litigant access to justice. The guarantee of cheap, effective and expeditious justice to the common man is, thus, defeated.

To read the full judgment, please find the attached file :

Attached file :

http://bombayhighcourt.nic.in/generatenewauth.php?auth=cGF0aD0uL2RhdGEvanVkZ2VtZW50cy8yMDE0LyZmbmFtZT1PU1dQMTc2NDExLnBkZiZzbWZsYWc9Tg==