HC stays proposed service tax on Individual Lawyers

In a relief to the individual lawyers, both Delhi High Court and Guwahati High Court has stayed the Central Government’s notification seeking to bring individual lawyers, who extend services to companies and firms under the service tax net from May 1 under the Finance Act, 2011, according to Hindu..In a relief to the individual lawyers, both Delhi High Court and Guwahati High Court has stayed the Central Government’s notification seeking to bring individual lawyers, who extend services to companies and firms under the service tax net from May 1 under the Finance Act, 2011, according to Hindu..The division bench of Chief Justice Dipak Misra and Justice Sanjiv Khanna heard the petition of the Delhi High Court Bar Association and has asked the Central Government to file its response within two weeks..Delhi High Court Bar Association through Advocates Ruchir Bhatia and Sumit Batra, had filed a petition challenging the notification of the Central Government. Senior Advocate and President of the Association A.S. Chandhiok, Senior Advocate P.H. Parekh and Senior Advocate S. Ganesh argued on behalf of Delhi High Court Bar Association while Advocate Manisha Dheer was government counsel..Media reports, Senior Advocate P.H. Parekh argued that, “We are not tour operators or taxi drivers servicing our clients, we are officers of the court and our duty to represent a litigant is an integral and inseparable part of the justice delivery system, whereby the lawyers assist courts to render justice”. Parekh said the burden of paying the 10 per cent service tax will not fall on the lawyers but indirectly on the litigant. He further added, “The lawyer will bill the client, and the bill will include the service tax. This will ultimately make access to justice more financially difficult for litigant”..It was also pointed to the Court that service was something a person must have the option to receive or not to receive. In case of need to have legal service, there was no option as it was a forced situation..In Guwahati High Court, Counsels for the petitioner, Senior Advocate Ashok Saraf and Advocate Medha Gope argued that an advocate is an officer of the court and assists in dispensing justice. Thus it cannot be considered as rendering service for their clients. The Counsels further added, “It is for this reason that the fee received by an advocate is regarded as a mere honorarium and not as a matter of contractual right”..Speaking to Bar & Bench Advocate Ruchir Bhatia said, “My contention from the beginning has been why a person approaches the court is because any of his right has been violated and he seeks justice and justice is guaranteed under the Constitution. Once this right is guaranteed, then the role of the advocate is to get the litigant justice. The advocate represents the litigant’s rights to the court to get him justice and any trigger on that is unconstitutional because it is a right guaranteed under the Constitution. This is a fetter on the right to get justice. The Government cannot impose a tax on a situation which is not out of choice but a forced situation. It is not an option for the litigant and it cannot be equated to other services”..Speaking to Bar & Bench Delhi High Court lawyer Shekhar Vyas commented, “Keeping in mind the economic scenario of litigants who come to court, the service tax is going to burden them. Excluding corporate clients, majority of clients are poor litigants and putting the extra 10 percent burden, it is going to make the delivery of justice system costlier and unaffordable for some of them. And if the intention of the Government is to collect revenue, the same is being collected from law firms and other entities. This particular aspect of levying service tax on individual lawyers should be excluded”..The matter will now be heard on May 24..Legal firms, as opposed to individual lawyers, are already under the service tax net since last year. Individual lawyers extending services to individuals still remain outside the ambit..Earlier on March 24, lawyers of Delhi High Court Bar Association had gone on strike protesting against the imposition of service tax on the lawyers in the new budget presented by the finance ministry as well as the Legal Practitioners Bill 2010 mooted by the Law Ministry.