2026 (3) TMI 657 - HC - Service Tax

Exemption for Advocate-to-Advocate Services renders tax proceedings without jurisdiction and leads to quashing of demand.

Notifications No.25/2012 and No.30/2012 exempt legal services by an individual advocate or a firm and treat the provider's service-tax liability as nil ... Validity of impugned show cause notice - Applicability of Notification No.25/2012 and Notification No.30/2012 to legal services between an individual advocate and an advocate/partnership firm - lack of jurisdiction - reverse charge mechanism. Whether the impugned proceedings for recovery of service tax could be sustained where Notifications dated 20th June 2012 exempt or fix the extent of service tax for legal services between an individual advocate and an advocate/partnership firm, and whether the Designated Officer acted with jurisdiction in passing the impugned order - HELD THAT:- The Court held that Notification No.30/2012 (and Notification No.25/2012) set out that in respect of services provided by an individual advocate or a firm of advocates by way of legal services the percentage of service tax payable by the person providing the service is Nil and that the notifications exempt or prescribe nil liability for the specific transaction between an advocate and an advocate/partnership firm. Because the notifications clearly preclude levy in the circumstances, the Designated Officer, having not considered or applied those notifications, acted without jurisdiction in confirming the demand. The court concluded that no useful purpose would be served by remitting the matter and therefore quashed the impugned order as passed contrary to the binding notifications. [Paras 5, 6] The impugned order confirming service tax demand was quashed as the Designated Officer acted without jurisdiction in relation to services covered by the notifications. Final Conclusion: The petition is allowed and the impugned order is quashed on the ground that Notifications No.25/2012 and No.30/2012 govern the levy on legal services between an individual advocate and an advocate/partnership firm, and the Designated Officer acted without jurisdiction in proceeding contrary to those notifications. Issues: Whether the impugned show cause notice dated 19.12.2020, the order dated 28.03.2024 and the recovery communication dated 21.07.2025 requiring the petitioner to pay service tax can be quashed on the ground that services by an individual advocate to an advocate or a firm of advocates are exempt or the liability is nil under Notification No. 25/2012-Service Tax and Notification No. 30/2012-Service Tax, thereby rendering the designated officer's proceedings without jurisdiction.Analysis: The notifications dated 20th June 2012 specify (a) exemption of legal services by an individual advocate or a partnership firm of advocates by way of legal services and (b) that in respect of services provided by an individual advocate or a firm of advocates by way of legal services the percentage of service tax payable by the person providing service is Nil with the person receiving service liable (table entry). The impugned proceedings proceeded notwithstanding the applicability of these notifications and did not accept or address the contention that service tax was not leviable on the individual advocate in the circumstances of the case. Prior decisions applying the same notifications and reasoning were relied upon to conclude that proceedings initiated contrary to the notifications are without jurisdiction.Conclusion: The impugned show cause notice, the order confirming the demand and the recovery communication are quashed and set aside on the ground that the proceedings were initiated and continued contrary to Notification No. 25/2012-Service Tax and Notification No. 30/2012-Service Tax, and therefore without jurisdiction; petition allowed in terms of prayer (a).