Justices S Muralidhar and Prathiba M Patil, while granting tax relief to the Senior Advocates from paying Service Tax on forward charge basis, held that the department cannot recover tax from the Advocates for the period 1st April 2016 to 5th June 2016.
The division bench however, clarified that the department can proceed against such clients who has paid the fees of the Senior Advocate, has failed to make payment of the corresponding service tax on reverse charge basis.
The bench, in High Court Bar Association v. Union of India, invalidated the levy of service tax on Senior Advocates under forward charge under the provisions of the Finance Act, 1994.
The bench observed that “since the above interim order became effective with effect from 1st April 2016 itself and is applicable to all Senior Advocates, the question of the Department now raising any demand for the period 1st April 2016 to 5th June 2016 does not arise. There is no prejudice caused to the Department for the simple reason that the service tax from 1st April 2016 itself ought to have been collected on reverse charge basis. If any client who has paid the fees of the Senior Advocate, has failed to make payment of the corresponding service tax on reverse charge basis, it would be open to the Department to proceed against such client to recover the service tax in accordance with law.”
Read the Text of the Order Below
