Allahabad High Court issues notice in petition challenging imposition of service tax on lawyers

A Division Bench of Justices Uma Nath Singh and V.K. Dixit of the Allahabad High Court recently issued notice in a writ petition challenging the constitutionality of the imposition of service tax upon advocates and arbitral tribunals. The order issuing notice to the Attorney General of India was passed on November 7, 2012 by the Lucknow Bench of the Allahabad High Court..A Division Bench of Justices Uma Nath Singh and V.K. Dixit of the Allahabad High Court recently issued notice in a writ petition challenging the constitutionality of the imposition of service tax upon advocates and arbitral tribunals. The order issuing notice to the Attorney General of India was passed on November 7, 2012 by the Lucknow Bench of the Allahabad High Court..It may be recalled that on April 29, 2011 the Delhi High Court had issued a stay on the implementation of service tax on lawyers through an amendment in the Finance Act. (Read our coverage of this issue here).Pursuant to this, on September 21, 2012, the Delhi High Court issued a similar order in WP (C) 5957 of 2012 (Delhi Tax Bar Association & Anr V Union of India), directing that “the provisions of Sections 65B(44) and 66B of the Finance Act, 1994 (as amended by the Finance Act, 2012) as well as Rule 2(1)(d)(D)(II) of the Service Tax Rules, 1994 shall not be given effect till the next date of hearing.”.The petition filed in the Allahabad High Court follows a similar line of argument as used in the Delhi High Court petitions. The grounds of challenge include the contention the tax hampers and directly affects a citizen’s right to access courts, thereby violating the provisions of the Constitution..The petition also challenges the introduction of the “reverse charge” principle in relation to a notification dated August 20, 2012 issued under Rule 8 of Point of Taxation Rules, 2011 which “requires an advocate to disclose his income to his clients and therefore impinges upon the right to privacy of the advocate.”.Lastly, the petition states that the imposition of service tax on the work done by arbitral tribunals not only makes arbitration a less attractive dispute resolution mechanism but that the word done by an “arbitral tribunal is a public good and the same cannot be regarded as ordinary commercial enterprise” and hence cannot attract service tax..The Petitioner was represented by Talha Abdul Rahman and Lakshyadeep Srivastava..Image courtesy this site.