Service Tax on lawyers – strike tomorrow
The Bar Council of Tamil Nadu has joined other lawyers associations in calling for a token court boycott against the reported move to impose service tax on lawyers.
The All-India Bar Association (AIBA), the Madras High Court Advocates Association (MHAA) and the Madurai Bar Association are against the Central Government for planning to impose 12 per cent service tax on lawyers, and have decided to strike work on February 2.
The grounds the lawyers would advocate:-
(i) The nature and purpose of the legal profession would not allow itself to be brought under the ambit of service tax.
(ii) Advocates should not be treated like businesspersons or any other professional.
(iii) Lawyers should not be forced to pass on the 12 per cent additional burden to the litigants.
(iv) People in authority should not wait till strike occurs. Strike takes place when other mechanisms fail.
(v) By no stretch of imagination can it be said assistance provided by lawyers to their clients will amount to rendering a `service' to warrant imposition of the tax.
(vi) Lawyers only assist the court in dispensation of justice and such assistance cannot be described as a service.
(vii) Clients and not lawyers would pay a tax on legal services.
(viii) A legal services tax is not a tax on lawyers, but a tax on those who seek legal advice.
(ix) Lawyers may pay the tax bill, but the taxes and the cost of administering the payments will be passed on to the clients in the form of higher bills.
(x) A legal services tax is a disincentive for citizens to seek legal advice.
(xi) A legal services tax would impose an additional levy on the same transaction and add to the burden of those already experiencing financial problems.
(i) Clients seeking legal advice on dissolution of marriage, bankruptcy, debt collection and similar matters are those who can least afford to pay an additional charge.
(ii) A tax on legal services would ironically impose an additional tax on those who were looking for ways to reduce their tax burden.
On a personal note, as a lawyer, I would prefer to be taxed. If a barber can be taxed, there seems to be no reason why a lawyer cannot be taxed and as all my clients are Central Excise or Service Tax assessees, they would be eligible to take credit of Service Tax paid on the fee paid to me only after they pay my fees, I hope to get paid promptly and the credit would really be an incentive for the clients to pay my fees.
Lawyers should welcome the move to impose a tax on their service – service is of course a bad name to what they provide to their clients.