Can Advocates be taxed for representation before Courts?
THE Finance Bill proposes to tax representational services provided by any person to any business entity before any court, tribunal or authority. An advocate is an officer of the court and his job is to assist the court in the justice delivery mechanism and in fact if an advocate is prevented from performing his duty, a prima facie case for contempt of Court is made out, as held by the Delhi High Court sometime back. Even the Supreme Court had held that an advocate is an officer of the Court. Is it legal or fair to tax such an officer of the court? And now, under the accrual system, he has performed/provided the service by his appearance in the court and if impressed by his performance in the court, the client vanishes without paying him, he has to still pay the tax even if he does not get paid!
Incidentally as of now there is an exemption for CAs, Cost Accountants and Company Secretaries for representation work as per Notification No. 25/2006 - S.T DATED 13.07.2006. Most probably the government will withdraw this notification once the Finance Bill is enacted and lawyers' representation will become a taxable service. If they forget there will be a funny situation where the lawyers whose main job is to argue in courts will be taxed for their arguments while CAs will be exempted.