The Bombay High Court on January 12 stayed a demand cum show cause notice issued by the Assistant Commissioner of Central Goods and Services Tax (CGST) seeking to levy service tax upon a lawyer.
The order was passed by a Bench of Justices Ujjan Bhuyan and Milind N Jadhav in a petition filed by advocate Sanjiv Madhusudan Shah
“Having heard learned counsel for the petitioner and on due consideration, we direct as an interim measure, there shall be stay of the impugned show cause cum demand notice dated 28.12.2020 until further orders,” the Court ordered.
It was the petitioner’s case that the Central government had 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 were exempted from the charge of service tax. That apart, it was also submitted that there is a provision for recovering service tax from the service recipient.
Ignoring the above, the show cause cum demand notice was issued mechanically, the petitioner contended.
The Court issued notice to the Assistant Commissioner of CGST and posted the case for further consideration on March 15, 2021.
By Notification No. 13120 17- B-Central Tax (Rate) dated 28th June 2017 as well as Notification No. 1312017-State Tax (Rate)- 30 June, a “reverse charge” had been made applicable to recipients of services rendered by all lawyers, law firms and Senior Advocates.
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 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.