Individual advocate wins service tax exemption case after procedural violations and denial of proper hearing

Bombay HC allowed petition challenging service tax recovery order against individual advocate. Court found procedural illegalities and breach of natural justice as petitioner was denied proper hearing opportunity. HC held that under Central Government notifications dated 20th June 2012, services provided by individual advocates are exempt from service tax levy, with taxable service being "Nil." Since Designated Officer acted without jurisdiction and contrary to clear notifications, court quashed the impugned order rather than remanding matter.

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Issues Involved:
1. Jurisdiction of the Deputy Commissioner to levy service tax on an advocate.
2. Procedural illegalities and breach of principles of natural justice.
3. Applicability of Notifications exempting advocates from service tax.

Summary:

Jurisdiction of the Deputy Commissioner:
The Petitioner, an advocate, challenged an Order-in-Original dated 26th October 2023, issued by the Deputy Commissioner, CGST and C. Excise, Raigad, demanding Rs. 35,82,298/- towards service tax along with interest and penalties. The Petitioner argued that the order was passed without jurisdiction since individual advocates are exempt from service tax under Notification No. 25/2012-Service Tax and Notification No. 30/2012-Service Tax, both dated 20th June 2012. The Court noted that the Designated Officer failed to consider these binding notifications, which clearly exempt services provided by individual advocates from service tax.

Procedural Illegalities and Breach of Natural Justice:
The Petitioner contended that the show-cause notice dated 24th December 2020 was never received, and even the Chartered Accountant representing the Petitioner was not furnished a copy. The Court found substance in the contention that there was a breach of principles of natural justice as the Petitioner was not granted an appropriate hearing before the impugned order was passed. The Petitioner had addressed a detailed letter to the Designated Officer post the hearing, raising these issues, which were not considered.

Applicability of Notifications:
The Court examined the relevant notifications which exempt services provided by individual advocates from service tax. The Court observed that the Designated Officer acted without jurisdiction by ignoring these notifications. The Court referenced a similar case, Ish Kiran Jain Vs. The Assistant Commissioner & Ors, where the Court had interfered under similar circumstances.

Conclusion:
The Court concluded that the Designated Officer acted contrary to binding notifications and without jurisdiction. Therefore, the impugned order was quashed and set aside. The Petition was allowed in terms of prayer clause (a), and the case was disposed of with no order as to costs.

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