Sunday, May 1, 2011

Service tax on lawyers stayed

The Delhi High Court has stayed till May 23 the imposition of a service tax on ‘Legal Consultancy Services' rendered by lawyers. The Centre's notification was to be implemented from May 1.

Acting on a writ petition filed by the Delhi High Court Bar Association challenging the levy of 10 per cent service tax, a Bench of Chief Justice Dipak Misra and Justice Sanjeev Khanna on Friday asked the government to file a reply within two weeks and listed the case for May 23.

Senior counsel S. Ganesh and P.H. Parekh argued on behalf of the Bar Association.

It was argued that the right to secure justice was a constitutional guarantee which could not be secured without representation before courts. Further, representation through advocates was an integral and inseparable part of the justice delivery system whereby they, as officers of the court, assisted it in rendering justice.

On March 24, members of the Bar Association had gone on strike protesting against the imposition of the tax in the new Union budget, as well as in the Legal Practitioners Bill 2010 mooted by the Law Ministry. As the agitation did not yield the desired results, the writ petition was filed.

The petitioner submitted that rendering of justice could never constitute rendering of service.

“It is the duty of the state not to deny any person equality before the law or equal protection of laws within the territory of India. The notification puts a discriminatory, arbitrary and unreasonable restriction on business entities from getting protection of laws,” it said.

It was pointed 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.

Contending that lawyers were not service providers, the petition sought a direction to quash the impugned levy and an interim stay on the notification imposing it.

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