2024 (2) TMI 355 - HC - Service Tax

Legal Services / Services of an Advocate - Recovery of Service Tax alongwith interest and penalty - several procedural illegalities, amounting to a breach of the principles of natural justice, in passing the order - HELD THAT - It appears that the Petitioner was not granted an opportunity of an appropriate hearing before the impugned Order-in-Original was passed against the Petitioner. Hence, there is substance in the contention as urged on behalf of the Petitioner that in passing the impugned order, there is a breach of the principles of natural justice. To this effect the Petitioner had infact addressed a detailed letter to the Designated Officer dated 18th October, 2023, which was post the hearing, which had taken place on 17th October, 2023 when the Petitioner s representative/Chartered Account appeared before the Designated Officer, inter alia making such grievance, as also contending that the service tax is not leviable on an individual advocate, under the said notifications issued by the Central Government. As set out in the Notification, the taxable service in respect of services provided or to be provided by the individual advocate for a firm of advocates has been set out to be Nil . Similarly Notification No.25/2012 dated 20th June, 2012, also clearly provides that the service provided by an individual advocate, partnership firm of advocates, by way of legal services being exempted from levy of service tax. It is observed that the notifications which are now placed for consideration of the Court are absolutely clear, they were not the subject matter of consideration in the case of Isha Kiran Jain 2023 (10) TMI 821 - BOMBAY HIGH COURT - no useful purpose would be achieved in present proceeding remanding to the Designated Officer. It is deemed fit in the interest of justice to quash and set aside the impugned order, for the reasons that the Designated Officer has acted without jurisdiction and as the impugned order is passed patently, contrary to the notifications dated 20th June 2012 - petition allowed.

Summary

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.