2017 (11) TMI 661 - HC - Service Tax

Service tax on advocates - period from 1st April 2016 to 5th June 2016 - Reverse charge mechanism - fees payable to advocates - N/N. 30/2012-ST dated 20th June 2012 - Held that - 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 - petition disposed off.

Summary

Issues:
Interpretation of interim order on service tax collection from Senior Advocates for the period from 1st April 2016 to 5th June 2016.

Analysis:
The judgment by the Delhi High Court, delivered by Mr. S. Muralidhar and Ms. Prathiba M. Singh, JJ., addressed the issue regarding the collection of service tax from Senior Advocates for the period from 1st April 2016 to 5th June 2016. The Respondents initially insisted on collecting service tax from Senior Advocates on a forward charge basis for this period. However, the Petitioner highlighted that an interim order passed by the Court on 1st April 2016 stayed the impugned notifications but allowed the Respondents to collect service tax on a reverse charge basis for fees payable to Senior Advocates under Notification No. 30/2012-ST dated 20th June 2012.

The Court clarified that the interim order from 1st April 2016, which permitted service tax collection on a reverse charge basis for fees paid to Senior Advocates, became effective immediately and applied to all Senior Advocates. Therefore, the Department could not demand service tax for the period from 1st April 2016 to 5th June 2016. The Court emphasized that there was no prejudice to the Department as service tax should have been collected on a reverse charge basis from 1st April 2016 onwards. If any client failed to pay the corresponding service tax on a reverse charge basis for fees paid to a Senior Advocate, the Department could take action against such clients to recover the service tax as per the law.

Consequently, the Court made the interim order dated 1st April 2016 absolute, preventing the Respondents from raising any service tax demands on Senior Advocates for the period from 1st April 2016 to 5th June 2016. The writ petitions and applications related to this issue were disposed of accordingly, providing clarity on the collection of service tax from Senior Advocates during the specified period.