TaxTMI 
TaxTMI 
2022 (9) TMI 1006
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....-ST dated 1.3.2016 (Annexure-4) to the extent that it seeks to recover service tax directly from Senior Advocates for the legal services provided by them and to the further extent that it envisages the relationship between a Senior Advocate and an advocate / firm as that of a client and counsel, as being arbitrary, unreasonable, patently illegal and thus violative of Articles 14 and 19(1)(g) of the Constitution of India. (ii) In the alternative to prayer (ii), for the issuance of an appropriate writ/order/direction or a writ in the nature of declaration declaring that Notification No.18/2016-ST dated 1.3.2016 (Annexure-3) and Notification No.9/2016-ST dated 1.3.2016 (Annexure-4), in letter and spirit had never been given effect to in view of judicial pronouncements and stay orders passed by various Hon'ble Courts which consequently resulted into payment of service tax by the service recipient for the legal services availed by them from Senior Advocates. (iii) In the alternative to prayer (iii), for the issuance of an appropriate writ/order/direction or a writ in the nature of declaration, declaring that Notification No.34/2016-ST dated 6.6.2016 (Annexure-6) and No....
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....pecified in the negative list (Section 66D) were exigible to service tax. The Central Government has also published sometime in the year 2012 a notification in exercise of power conferred by Section 68(2) of the Finance Act, 1994, as contained in Notification No.30/2012-ST dated 20.06.2012, which specified that in respect of certain taxable services specified in paragraph 1 of the said notification, the extent of service tax payable by the person providing the service and the person receiving the service would be such as provided in the table II of the notification. The Central Government, in exercise of power conferred upon it by Section 93(1) of the Finance Act, 1994, published Notification No.25/2012 dated 20.06.2012 exempting certain services from the ambit of Section 66B of the Finance Act, 1994. Serial No.6 of the said notification exempted services provided by an individual as an advocate or a partnership firm of advocates by way of legal services to an advocate or partnership firm of advocates providing legal services, any person other than a business entity or a business entity with a turnover up to Rupees ten lakh in the preceding financial year. According to the....
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....her than a senior advocate by way of legal services"; Similarly, the First Exemption Amendment Notification, Notification No.9/2016-ST dated 01.03.2016, limited the exemption given to the services provided by Senior Advocates. The said notification envisaged the relationship between a Senior Advocate and an advocate/firm as that of a client and counsel. The relevant portion of the First Exemption Amendment Notification is reproduced below which reads as under : "1. In the said notification,- (a) in the first paragraph,- (i) in entry 6, for clause(b) and clause (c), the following clauses shall be substituted, namely,- "(b) a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services to- (i) an advocate or partnership firm of advocates providing legal services; (ii) any person other than a business entity; or (iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or (c) a senior advocate by way of legal services to a person other than a person ordinarily carrying out any activity relating to industry commerce or a....
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....igh Court vide Transfer Petition (s) (Civil) 820-829/2016 [Union of India and Another v. Kavin Gulati etc. with T.P.(C) No.16/2017 dated 18.08.2017]. The Delhi High Court disposed of all the writ petitions vide final order dated 18.09.2017 upholding its interim order dated 01.04.2016 that service tax on the said service would be collected on Reverse Charge Mechanism basis for the period 01.04.2016 to 05.06.2016, as has been stated in the counter affidavit that the issue has not finally been adjudicated as yet. 7. The respondents have come out with the stand in the counter affidavit as under paragraph 8 thereof that the Notification No.30/2012-ST dated 20.06.2012; Sl. No.05 of the said notification provides for payment of 100% service tax liability by the recipient of service under Reverse Charge Mechanism (RCM). However, Notification No.18/2016-ST dated 01.03.2016 amended the Notification No.30/2012-ST dated 20.06.2012 due to which, in respect of legal services which were covered under full reverse charge, has been amended as under :- Particulars Percentage of Reverse Charge Service by a firm of advocates or an individual advocate other than senior advocate, by way o....
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....e it" (p. 225). If the dominant intention of the legislature can be clearly and doubtlessly spelt out, the inhibition contained in the rule against perpetuity becomes of doubtful applicability as the "inhibition of the rule" is a matter of degree which would "vary secundum materiam" (p. 226). Sometimes, where the sense of the statute demands it or where there has been an obvious mistake in drafting, a court will be prepared to substitute another word or phrase for that which actually appears in the text of the Act (p. 231). 18. In a recent decision of this Court in National Agricultural Coop. Marketing Federation of India Ltd. v. Union of India [(2003) 5 SCC 23] it has been held that there is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment. Every legislation whether prospective or retrospective has to be subjected to the question of legislative competence. The retrospectivity is liable to be decided on a few touchstones such as: (i) the words used must expressly provide or clearly imply retrospective operation; (ii) the retrospectivity must be reasonable and not excessive or harsh, otherwise it runs the ri....
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....all the judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico.'" 21. In Allied Motors (P) Ltd. v. CIT [(1997) 3 SCC 472] certain unintended consequences flowed from a provision enacted by Parliament. There was an obvious omission. In order to cure the defect, a proviso was sought to be introduced through an amendment. The Court held that literal construction was liable to be avoided if it defeated the manifest object and purpose of the Act. The rule of reasonable interpretation should apply. "A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole." In the backdrop of the afore....
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....ble, namely:- Table Sl.No. Description of a service Percentage of service tax payable by the person providing service Percentage of service tax payable by the person receiving the service 1 in respect of services provided or agreed to be provided by an insurance agent to any person carrying on insurance business Nil 100% 2 in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road Nil 100% 3 in respect of services provided or agreed to be provided by way of sponsorship Nil 100% 4 in respect of services provided or agreed to be provided by an arbitral tribunal Nil 100% 5 in respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services Nil 100% 6 in respect of services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in subclauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994 Nil 100% 7 (a) in respect of servic....
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.... Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 210 (E), dated the 17^th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely:- .... ... ... 6, Services provided by- (a) an arbitral tribunal to - (i) any person other than a business entity; or (ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; (b) an individual as an advocate or a partnership firm of advocates by way of legal services to,- (i) an advocate or partnership firm of advocates providing legal services; (ii) any person other than a business entity; or (iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or (c) a person represented on an arbitral tribunal to an arbitral tribunal; ... ... ... 3. This notification shall come into force on the 1st day of Jul....
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.... (i) sub-clause (ib) shall be omitted; (ii) for sub-clause (ic), the following shall be substituted, namely:- "(ic) provided or agreed to be provided by a selling or marketing agent of lottery tickets in relation to a lottery in any manner to a lottery distributor or selling agent of the State Government under the provisions of the Lottery (Regulations) Act, 1998 (17 of 1998);"; (iii) in sub-clause (iv), for item (B), the following shall be substituted, namely:- "(B) a firm of advocates or an individual advocate other than senior advocate, by way of legal services, or"; (b) in paragraph (II), in the TABLE,- (i) Sl. No. 1B and the entries relating thereto shall be omitted; (ii) against Sl. No. 1C, for the entry under column (2), the following shall be substituted, namely:- "in respect of services provided or agreed to be provided by a selling or marketing agent of lottery tickets in relation to lottery in any manner to a lottery distributor or selling agent of the State Government under the provisions of the Lottery (Regulations) Act, 1998 (17 of 1998)"; (iii) against Sl. No. 5, for the entry unde....