Service Tax on Lawyers - Supreme Court Stays Bombay High Court Judgement
SERVICE Tax on lawyers is a tricky proposal. When asked why Service Tax was not imposed on lawyers, Chidambaram asked, "which lawyer provides service?" His successor Pranab Babu held PC in high esteem but disagreed with him and had introduced a tax on the Legal Fraternity without naming either Lawyer or Advocate.
Lawyers have gone on strike in several parts of the country and also did what they know best - petitioned the courts. Though Chidambaram's retort was taken as a joke, he was actually stating a solemn truth. Lawyers are officers of the court and their duty is to assist the court; so this service of assisting the court cannot be really taxed.
Several High Courts have stayed the Service Tax on lawyers, but the Bombay High Court took a different view and upheld the levy of Service Tax. While upholding the levy (), the High Court observed,
Profession is noble but the professional is not necessarily so.
The private law colleges and which are mushrooming do not necessarily churn out a noble professional. They may conduct and carry a course of study after completion of which they confer a degree but that hardly guarantees that the recipient thereof functions and works efficiently for the society as a whole. Thus, falling standards in the society and the urge to make quick and fast money catches up.
In present day litigation one would find parties ready to go at any length and for a favourable order. All of them do not necessarily seek justice. They are only worried and bothered about a cause which they propound and espouse. So long as that cause, whatever be its merits, succeeds, they are happy. In that process, if justice is a casualty they would hardly complain. In several instances we find that speculative litigation is instituted and pursued with full vigour and all might. Parties do not wish to give up although warned of the consequences of institution and prosecution of such a litigation. If they have brought about a situation where justice is accessible only to those with heavy purses or to wealthy or rich and hardly available and affordable for those below the poverty line and downtrodden, then, persons claiming to be professionals and advising them can hardly be said to be aggrieved.
Yesterday the Supreme Court stayed the Bombay High Court order.
One of the grounds urged before the Supreme Court was that the High Court ought to have considered that Service Tax being a Central levy, should be same all over the country and since other High Court have stayed the levy, this High Court should not have hastily upheld the tax. It was also argued that:
1. The relation between a lawyer and a litigant is not that of service provider and service recipient.
2. Rendering assistance to the court of law as an officer of the court does not amount to service at all.
3. Levy of Service Tax on the provision of assistance to the court will hit the provision of justice guaranteed under the constitution.
Now, should tax be paid on the services(if any) provided by lawyers?