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TMI Blog2014 (12) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... ary and violative of Articles 13, 14, 19(1)(g), 246, 265 and 268A of the Constitution of India. (b) Issue a writ, order of direction in the nature of certiorari or any other writ, order or direction of like nature, quashing section 71(A)(5)(d) of the Finance Act, 2011. (c) Issue a writ of mandamus, or a writ in the nature of mandamus, or any other appropriate writ, order or direction, restraining the Respondents themselves, by their servants, agents and subordinates from, directly or indirectly giving effect to or acting upon the impugned amendment or collecting Service Tax on the basis of section 65(105)(zzzzm) read with section 66 as substituted by Finance Act, 2011. (d) In case the High Court is of the view that service tax is leviable on Advocates hold that the provisions of Rule 4A of the Service Tax Rules, 1994, provisions relating to levy of penalty under section 77 of the Finance Act, 1994 and prosecution under section 89 of the Finance Act, 1994 to the extent they are made applicable to Advocates for non issue of invoices within 14 days of the completion of service are ultra vires the Finance Act, 1994 and Article 19(1)(g) of the Constitution of India." 3] The reliefs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively represent them in the Court of law, then, a tax cannot be levied by the State on them. That would amount to denying the litigant access to justice. The guarantee of cheap, effective and expeditious justice to the common man is, thus, defeated. 6] It is submitted that the levy of Service Tax imposes a heavy additional burden on litigants and also disables them from approaching the Court. It is in these circumstances, that it has been challenged by the Advocates. An Advocate is an officer of the Court. It is for this reason that the fees received by an Advocate is regarded as a mere honorarium and not as a matter of contractual right. It is also for this reason that it has been held by the Hon'ble Supreme Court that an Advocate cannot exercise any right of lien over his clients' papers and documents which are lying with him, for the purpose of compelling the client to pay the Advocate's fees. 7] The said Amendment violates Article 14 of the Constitution inasmuch as the said amendment discriminates between representation made on behalf of an individual and representation made on behalf of a business entity. This makes it manifestly evident that the said amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserted is clearly ultra vires the Constitution of India. The impugned amendment brings within the purview of Service Tax appearances made by Advocates before Arbitral Tribunals also. Alternative Dispute Resolution is a well recognized mechanism meant to aid to clear back logs of cases in the Courts. Hearing and adjudication by Arbitral Tribunal can, therefore, never be "service" in law. It is an adjudication recognized by law as a decree in personam. 10] It is submitted that the Advocates appear in the Court to represent their clients, but in effect assist the Court to dispense justice. The fact that the assistance rendered by Advocates is to bring in harmony and peace in the society and resolve disputes between the parties, even by applying the fiction, to consider the representation provided by Advocates as service would be highly unreasonable and absurd. 11] It is also submitted that the Hon'ble Supreme Court in All India Federation of Tax Practitioners V/s. Union of India 2007 (7) SCC 527 has held that Service Tax is a value added tax which is levied on the value addition which is made as a result of rendition of a service. It flows directly from this judgment that merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide free legal aid to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities. Access to justice is recognized as a fundamental right. Hence levy of Service Tax on Legal Services violates the fundamental rights and is, therefore, violative of the Constitution of India. 13] It is submitted that the levy of Service Tax after the Constitutional 88th Amendment Act whereby section 92C was inserted in List 1 to provide for Levy of Taxes on Services by the Central Government can only be under Entry 92C and not under Entry 97 of List 1 which is a residual entry. Since the Constitutional 88th Amendment Act has not yet been brought into force there is no power with the Central Government to levy any tax on Services before such Notification and therefore levy of Service Tax under sub clause (zzzzm) can only be after such Notification by the Central Government but presently is beyond the jurisdiction of the Parliament under Article 246(1). 14] It is submitted that without prejudice to the above assuming that Service Tax is leviable on the legal profession, the requirement of issuing invoices within 14 days of completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed. There the elaboration of the above as made by the counsel appearing before us, is set out. 17] It is in the aforesaid facts and circumstances that the reliefs in terms of the prayers above, have been prayed. An affidavit in reply has been filed by the Deputy Commissioner of Service Tax and which is on behalf of Respondent No.4. In that affidavit, the stand of the Respondent No.4 is as under; "The main ground of the Petitioner is that Advocates are officers of the Court and not service providers. It is contended by the Petitioner that providing assistance to the Court cannot be regarded as 'service' and therefore service tax cannot be levied on lawyers. It may be pointed out that not only lawyers but also other professionals like chartered accountants, cost and work accountants and company secretaries also provide representational services before the statutory authorities like Tribunals etc. They were earlier exempted from paying service tax on representational services vide Notification No.25/2006ST, dated 13.07.2006. The said Notification has since been rescinded vide Notification No.32/2011ST, dated 25.04.2011 and now even such professionals are required to pay se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mere fact that a tax falls more heavily on certain goods or persons will not result in its invalidity. The Courts lean more readily in favour of upholding the constitutionality of taxing laws in view of the complexities involved in the social and economic life of the community. In light of the aforegoing, I say that the reasonable classification for taxation purpose is well within powers of the Parliament. The classification within a broader group into subgroups based on reasons like capacity to pay and comply with taxing provisions, and lessening the tax burden on individual litigants cannot be held as legally discriminating. With reference to paras 4, 5 and 6 of the Writ Petition, the Respondent states that the legislative competence of the Parliament to levy service tax under Entry 97 has been upheld by the Hon'ble Apex Court in several judgments. In the case of All India Federation of Tax Practitioners V/s. Union of India [2007(7) S.T.R. 625 (S.C.)] it has been held that Parliament has legislative competence to levy service tax by way of impugned Finance Acts of 1994 and 1998 under Entry 97 of List I and accordingly imposition of service tax on professionals upheld in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l providing Legal Services, is unsustainable. I say that the Constitution of India allows for reasonable classification for the purpose of Legislation, as stated above. With reference to paras 12, 13 and 14 of the Writ Petition, the Respondent states that these case laws referred to by the Petitioners are on the duties of a lawyer towards his client and also to maintain the decorum of the Hon'ble Courts. The said judgments merely speak of the duties of a lawyer to the Courts before whom they appear. The propositions laid down in the said judgments is undisputed, but the same has no application to, or bearing on the issues at hand, namely, levy of service tax on legal services provided by a lawyer to his client. I say that it is the lawyer's skill and expertise which is the service he provides to the litigants, which makes a difference to the representation of his client's case before the Court of law and assists the Court in arriving at the proper interpretation of law. With reference to paras 15 and 16 of the Writ Petition, the Respondent states that no restriction has been imposed on the practice of the profession of law. The Parliament has levied service tax on repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by the client who has availed of his services. Even chartered accountants/company secretaries/cost accountants are similarly placed. They are also prohibited from entering into some professions/activities. That in itself does not exclude them from the category of service providers in respect of the services provided by them. With reference to paras 22, 23 and 24 of the Writ Petition, the Respondent states that 'value addition' does not necessarily mean that certain intrinsic changes must occur in what is being offered as goods or services. In the case of services provided by the advocates, it is their expertise in legal matters which is availed of the clients for monetary consideration on which service tax has been sought to be levied. It is submitted that in law a transaction can, depending on its nature attract two taxes,and thus, while the income of a lawyer is subject to income tax, service tax is leviable on the services provided by the lawyer to this client. Moreover, the nature of income tax and service tax is different, the former being a direct tax and the latter being an indirect tax. The incidence in the former is on the professional or entity rendering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra vires of the Finance Act 1994 read with Article 19(1)(g) of the constitution. Further notification 25/2011ST dated 31/03/2011 has defined the point of taxation in respect of certain services, including legal services, as the date on which payment is received or made as the case may be. (Annexed is copy of the Notification No.25/2011Service Tax, dated 31/03/2011 marked as Exhibit B)." 18] There is further affidavit in reply filed by respondent No.4 on 13th January, 2012. In para 5 and 9 of the same this is what is stated: " 5. I say that while elaborating the above said contention it has been stated that advocates are governed by rules and regulations formed by the bar council, to subserve the cause of justice. An advocates work under severe constraints, restrictions and public duties, cast by law under peculiar statutory provisions governing the profession and therefore they are entitled to remain out of the net of service tax. I respectfully say and submit that the said contention is also equally misconceived and not tenable in the eyes of law. I say that it is true that functioning of his profession is controlled, governed and regulated by the Central and State Government. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to levy service tax on the advocates in proper exercise of its legislative competent and that there is no discrimination as alleged by Respondent No.8." 19] It is on the above material that we have heard the counsel appearing for the parties. Mr. Thacker, learned advocate, appearing for the Petitioner submitted that a lawyers office or an advocates chamber is not a commercial or business establishment. The advocate does not carry on any business or profit making venture. In the present case, by imposing a tax for the services rendered by the advocates/lawyers, it is ultimately the litigant or a client who will suffer. He submits that though the controversy is narrowed down to some extent still, what the Petitioner is aggrieved by is a step or measure of recovering service tax from the advocate and for a period prior to the amendment. 20] It is in that regard Mr. Thacker invites our attention to Notification No.30/2012 dated 20th June, 2012 and submits that by this Notification and which is issued under exercise of the powers conferred by section 68(2) of the Finance Act, 1994 (Act 32 of 1994) and in supersession of clause (i) of Notification of the Government of India in the Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsultants, is identical or similar. Therefore, he proceeds to levy Service Tax on advice, consultancy or technical assistance provided in the field of law. The clarification given that the tax would not be applicable in case the service provider or the service receiver is an individual, is a misnomer. That does not remove the basic and fundamental anomaly in equating the services of lawyers, legal consultants and advocates with the cost accountant, chartered accountant, company secretaries and other consultants. They essentially concentrate on advisory and consultancy services and to corporates or business concerns or entities. The advocates do not either individually or collectively cater only to business entities. The term is hopelessly vague. Even a sole proprietary concern and which is an individual business activity can be termed as a business entity. Small and petty traders carrying on business individually or collectively in the name or nomenclature of a firm are not cash rich or financially powerful to bear the burden of any additional taxation. Therefore, the services provided by individual advocates or firms both too individuals as also business entities cannot be brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88th Amendment to the constitution has not been brought into effect. This is a specific entry and in relation to Service Tax. Therefore, the levy of Service Tax cannot be said to be permissible under entry 97 of this list. For these reasons, he submits that the levy is bad in law. 23] The compilation of the Notifications and relevant statutory provisions has been handed over by Mr. Thacker. That is taken on record. Mr. Thacker placed reliance upon the following judgments: 1) D. P. Chadha V/s. Triyugi Narain Mishra and others reported in (2001) 2 Supreme Court Cases 221; 2)All India Federation of Tax Practitioners and others V/s. Union of India and Others reported in (2007) 7 Supreme Court Cases 527; 3)Tamil Nadu Kalyana Mandapam Assn. V/s. Union of India reported in 2004(167) E.L.T. (S.C.); 4)The Bar Council of Maharashtra V/s. M. V. Dabholkar and Others reported in (1976) 2 Supreme Court Cases 291; 5)State of Maharashtra V/s. Manubhai Pragaji Vashi and others reported in (1995) 5 Supreme Court Cases 730; 6)Manoharan V/s. Sivarajan and others reported in (2014) 4 Supreme Court Cases 163; 7)All India Sainik Schools Employees' Association V/s. Defence MinistercumChairman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be exempted from payment of Service Tax. Here also, both the terms advocate and Arbitral Tribunal are defined. 25] By Notification No.30/12 which is also issued on 20th June, 2012 the position is further clarified. 26] Mr. Pakale submits that as explained in the affidavit in reply there is absolutely no substance in the challenge raised by the Petitioners. Mr. Pakale submits that by the constitutional provision, namely, Article 19(1)(g) there is a right to practice any profession, or to carry on any occupation, trade or business, however, this is subject to the reasonable restriction which has been prescribed by Article 19(6). Nothing in subclause (g) of clause (1) of Article 19 shall affect the operation of any existing law insofar as it imposes or prevents making of any law in the interest of general public to impose reasonable restrictions on the exercise of the right conferred by the said subclause and particularly the restrictions of the nature specified therein. Therefore, it is not a absolute right but subject to reasonable restrictions. The imposition of a tax including Service Tax does not restrict a person from exercising his right to carry on any profession, trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mandate of Article 286 of the Constitution of India. That cannot be held to be a unreasonable restriction on the fundamental right guaranteed by Article 19(1)(g) of the Constitution of India. The tax cannot be said to be excessive. 28] Mr. Pakale also submits that retrospective operation of a taxing statute is not necessarily unreasonable and the Petitioners have failed to point out any particular circumstances in which the same could be said to be so. Hence the challenge based on Article 14 of the Constitution of India must fail. 29] According to Mr. Pakale equally baseless is the challenge based on the Entry 92C of list I of Schedule VII of the Constitution of India. The argument that Constitution (88th Amendment) Act has not been brought into force or effect, will not help the Petitioners by any means. There is no bar for taxation and Mr. Pakale heavily relies upon Article 245, Article 246 and Article 248 of the Constitution of India in that regard. By heavily relying upon Article 248, Mr. Pakale submits that by subArticle( 1) of that Article Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss entity, by any person, in relation to representational services before any court, tribunal or authority; (iii) to any business entity, by an arbitral tribunal, in respect of arbitration. Explanation : For the purposes of this item, the expressions "arbitration" and "arbitral tribunal" shall have the meanings respectively assigned to them in the Arbitration and Conciliation Act, 1996 (26 of 1996)." 34] Thus, the taxable service means any service provided or to be provided to any person, by a business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner. The other part of this definition is in relation to representational services before any Court, Tribunal or Authority and to any business entity by an Arbitral Tribunal in respect of arbitration. The explanation defines the expressions 'arbitration' and 'arbitral Tribunal'. 35] This was the provision as substituted by section 74 of the Finance Act 2011 (8 of 2011) with effect from 1st May, 2011. 36] Then, our attention has been invited to the Notifications in the field. In that regard, Mr. Thacker has traced the definition of the above term and as appearing in the Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to advice, consultancy or assistance in any branch of law, alone were brought within the purview of this definition and the Service Tax. 38] However, Mr. Thacker has fairly brought to our notice the amendment made to the Finance Act by virtue of a Notification and which also has been relied upon by Mr. Pakale. That Notification No.12/2012S. T. dated 17th March, 2012 sets out the list of services exempted from Service Tax after Finance Act No.12 of 2012, which is termed as a negative list. 39] In this Notification it has been provided that the Central Government is satisfied that it is necessary in the public interest to exempt the taxable services from the whole of the service tax leviable thereon under section 66B of the Finance Act and at clause (6) the services provided to any person other than a business entity by an individual as an advocate or a person represented on and as a Arbitral Tribunal is inserted. Therefore, such taxable services were exempted from the whole of the service tax. Mr. Thacker submits that for the first time the term advocate is appearing in the Finance Act, 1994 and that would mean that services provided to any person other than a business entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that poor and needy section of the population requires advice, consultancy or assistance in any branch of law, if he requires legal advice, aid and assistance, then, that should be available to him at times immediately and cheaply. He should not be burdened with a tax to be levied on the advocate for providing such services. Therefore, if the legislature thought it fit to exclude a individual advocate and rendering the above services to individuals, so long as he is rendering services to those who cannot afford to pay heavy professional fees and charges being individuals that the legislature deemed it fit not to include in the tax bracket the individual advocates. These advocates may be rendering services to the needy and specially women and children at Village, Taluka, District, Town and even at city levels. It is, therefore, apparent to us that the legislature while making the above distinction did not in any manner overlook the constitutional guarantee and as envisaged in the preamble to the Constitution of India., so also Article 21 and 39A thereof, the legislature made a distinction and which appears to us to be completely reasonable. The classification between those who can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt that the violation of the constitutional provisions was so glaring that the legislative provision under challenge cannot stand. Sans flagrant violation of the constitutional provisions, the law made by Parliament or a State Legislature is not declared bad." 14. This Court has repeatedly stated that legislative enactment can be struck down by Court only on two grounds, namely (i), that the appropriate Legislature does not have competency to make the law and (ii), that it does not take away or abridge any of the fundamental rights enumerated in Part III of the Constitution or any other constitutional provisions. 25. In Hamdard Dawakhana, the Court also followed the statement of law in Mahant Moti Das and the two earlier decisions, namely, Charanjit Lal Chowdhury V/s. Union of India and others and The State of Bombay and another V/s. F. N. Balsara and reiterated the principle that presumption was always in favour of constitutionality of an enactment. 27. A well known principle that in the field of taxation, the Legislature enjoys a greater latitude for classification, has been noted by this Court in long line of cases. Some of these decisions are : M/s. Steelworth Limited V/s. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the complaint by Mr. Thacker inasmuch as imposition of such levy does not burden the litigant or the consumer of justice. We do not find any substance in the complaint that the profession of advocates and legal profession itself has been treated on par with commercial or trading activities or dealings in goods and other services. Merely because of the role of the advocate, it does not mean that his position as an officer of the Court and part and parcel of administration of justice is in any way undermined leave alone interfered with. The Advocates and legal practitioners are known to pay professional taxes and taxes on their income. They are also brought within the purview of service tax because their activities in legal field are expanding in the age of globalization, liberalization and privatization. They are not only catering to individuals but business entities. If it is found that the advocates are catering to affluent and rich class of litigants and recipients of legal services, then, the tax on the services rendered to them is definitely within the permissive sphere of legislation. That cannot be faulted. 44] In this regard, it would be proper and appropriate to refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x the rate of tax. This is the primary object for enacting the Finance Act. But it does not mean that a new distinct charge cannot be introduced by the Finance Act. For example, what is not "income" under the Income Tax Act, 1961 can be made income by the Finance Act. This is, however, subject to the Finance Act complying with the constitutional limitations. Additional tax revenue can be collected either by increasing the rate or by levy of a fresh charge. All levies through the medium of the Finance Act may either enhance the rate or levy a fresh charge. The Finance Act can also make an extensive modification in an Act. 27. In Madurai District Central Coop. Bank Ltd. v. Third ITO [(1975) 2 SCC 454 : 1975 SCC (Tax) 374 : AIR 1975 SC 2016] this Court held that the Income Tax Act, 1961 and the annual Finance Acts are enacted by Parliament in exercise of the power conferred by Article 246(1) read with Entry 82 of List I. It was further held that though it was unconventional for Parliament to amend the taxing statute by incorporating the amending provision in an Act of a different pith and substance, such course would not be unconstitutional. It was held that though the Income Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry and interpretation of a taxing entry in List I and List II of the Seventh Schedule to the Constitution. Therefore, professions will not include services under Entry 60. For the above reasons, we hold that Parliament had absolute jurisdiction and legislative competence to levy tax on services. While interpreting the legislative heads under List II, we have to go by schematic interpretation of the three Lists in the Seventh Schedule to the Constitution and not by dictionary meaning of the words "profession" or "professional" as was sought to be argued on behalf of the appellants, otherwise the distinction between general entries and taxing entries under the three Lists would stand obliterated. The words "in relation to" and the words "with respect to" are no doubt words of wide amplitude but one has to keep in mind the context in which they are used. 34. As stated above, Entry 60, List II refers to taxes on professions, etc. It is the tax on the individual person/firm or company. It is the tax on the status. A chartered accountant or a cost accountant obtains a licence or a privilege from the competent body to practise. On that privilege as such the State is competent to levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. The said levy was challenged on the ground that under Section 100 of the Government of India Act, 1935 (The GOI Act, 1935 read with Entry 50 in Schedule VII, the Provincial Legislature had power to make law with respect to taxes on luxuries, including taxes on entertainments, amusements, betting and gambling. It was urged on behalf of the appellant that Entry 50 was not applicable since Entry 50 contemplated enactment of a law imposing taxes on persons who receive or enjoy the entertainments/amusements and, therefore, the said entry did not authorise imposition of tax on assessee/persons who provide entertainments or amusements. 38. According to the appellant, Western India theaters were entertainment providers; that they were not entertainment receivers; that they simply carried on their profession, trade or calling and, therefore, Entry 50 was not applicable. It was further urged that entertainment providers fell under Entry 46, which entry is similar to Entry 60 of List II in the present case and which referred to taxes on professions, trades, callings and employments. This argument advanced on behalf of the appellant was rejected by this Court. It was held that Entry 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssionals such as advocates, and who too are well conscious of their status. The manner in which the services of lawyers and advocates are rendered has been a subject matter of a decision in the case of disciplinary action initiated by Bar Council of Maharashtra against a professional. In that context, the decision of the Hon'ble Supreme Court in the case of The Bar Council of Maharashtra V/s. M. V. Dabholkar & Ors. reported in 1976(2) SCC 291 the Hon'ble Supreme Court held as under: " 18. How can a disciplinary authority, aware of its accountability to the Indian Bar, functioning as the stern monitor holding the punitive mace to preserve professional purity and promote public commitment and appreciative of what is disgraceful, dishonourable and unbecoming, judged by the standards of conduct set for this noble calling and deviations damaging to its public image, find its way to hold such horrendous misbehaviour as snatching, catching, fighting and undercutting as not outraging the canons of conduct without exposing itself to the charge of dereliction of public duty on the trisection of Rule 36 and blind to the 'law for lawyers'? 19. It has been universally understo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the society as a whole. Thus, falling standards in the society and the urge to make quick and fast money catches up. In present day litigation one would find parties ready to go at any length and for a favourable order. All of them do not necessarily seek justice. They are only worried and bothered about a cause which they propound and espouse. So long as that cause, whatever be its merits, succeeds, they are happy. In that process, if justice is a casualty they would hardly complain. In several instances we find that speculative litigation is instituted and pursued with full vigour and all might. Parties do not wish to give up although warned of the consequences of institution and prosecution of such a litigation. If they have brought about a situation where justice is accessible only to those with heavy purses or to wealthy or rich and hardly available and affordable for those below the poverty line and downtrodden, then, persons claiming to be professionals and advising them can hardly be said to be aggrieved. 47] The Hon'ble Supreme Court has time and again expressed its pain and anguish that doors of the Court are not open to those who knock at them the most. In a decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the nature of our judicial process that we do this with the knowledge that more worthy causes of lesser men who have been long waiting in the queue have been blocked thereby and the queue has consequently lengthened. Perhaps the time is ripe for imposing a time limit on the length of submissions and page limit on the length of judgments. The time is probably ripe for insistence on brief written submissions backed by short and time bound oral submissions. The time is certainly ripe for brief and modest arguments and concise and chaste judgments. In this very case we heard arguments for 28 days and our judgment runs to 181 pages and both could have been much shortened. We hope that we are not hoping in vain that the vicious circle will soon break and that this will be the last of such mammoth cases. We are doing our best to disentangle the system from a situation into which it has been forced over the years by the existing procedures. There is now a public realisation of the growing weight of the judicial burden. The cooperation of the bar too is forthcoming though in slow measure. Drastic solutions are necessary. We will find them and we do hope to achieve results sooner than ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge business groups and also serving their interests. Hence, we have labels such as "corporate Law" and "corporate Lawyers". Today, like any other service provider Advocates are pushing themselves by rigorous marketing and advertisement, branding themselves as specialists in Corporate Law, Intellectual and other property rights, divorce law and not Matrimonial and Family Laws etc. If they are part of and have entered the market, exhibiting all trends prevailing therein, then, it is surprising that they are agitated, worked up at being termed service providers and taxed as such. They have qualified themselves for being bracketed with other services noted by the Hon'ble Supreme Court. None grudges their achievements, success in providing diverse services and some times under one roof but what surprises us is their reaction and response at being termed as additional revenue generating source by the State. The State looks at the organised legal set up alone this way and at the same time excludes individual Advocates rendering legal aid, advice and assistance to the poor, impoverished and needy. This distinction or segregation of services made by the Parliament does not fall foul of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively. In that regard, the Hon'ble Supreme Court held as under: " 11. Mr. Sastri also argued that the retrospective operation of the impugned section should be struck down as unconstitutional, because it imposes an unreasonable restriction on the petitioners' fundamental right under Article 19(1)(g). It is true that in considering the question as to whether legislative power to pass an Act retrospectively has been reasonably exercised or not, it is relevant to enquire how the retrospective operation operates. But it would be difficult to accept the argument that because the retrospective operation may operate harshly in some cases, therefore, the legislation itself is invalid. Besides in the present case, the retrospective operation does not spread over a very long period either. Incidentally, it is not clear from the record that the petitioners did not recover sales tax from their customers when they sold the gold ornaments to them. The counter affidavit filed by the respondent State alleges that even where sales tax has not been charged separately the price charged included salestax because it was the usual practice of every registered dealer doing similar business to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State to realise its revenues which are necessary for carrying on the administration in the interest of the general public. The fact that in some cases restrictions may result in the extinction of the business of a dealer would not by itself make the provision as to cancellation of registration an unreasonable restriction on the fundamental right guaranteed by Article 19(1)(g). We may in this connection refer to Narendra Kumar v. Union of India (1960) 2 SCR 375: (AIR 1960 SC 430) where it was held that: "the word restriction in Arts. 19(5) and 19(6) of the Constitution includes cases of 'prohibition' also; that where a restriction reaches the stage of total restraint of rights special care has to be taken by the Court to see that the test of reasonableness is satisfied by considering the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, the beneficial effect reasonably expected to result to the general public, and whether the restraint caused by the law was more than wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved by this Court in Khandige Sham Bhat v. the Agricultural Income Tax Officer (1963) 3 SCR 809 : (AIR 1963) SC 591) in respect of taxation laws, the power of legislature to classify goods, things or persons are necessarily wide and flexible so as to enable it to adjust its system of taxation in all proper and reasonable ways. The courts lean more readily in favour of upholding the constitutionality of a taxing law in view of the complexities involved in the social and economic life of the community. It is one of the duties of a modern legislature to utilise the measures of taxation introduced by it for the purpose of achieving maximum social good and one has to trust the wisdom of the legislature in this regard. Unless the fiscal law in question is manifestly discriminatory the court should refrain from striking it down on the ground of discrimination. These are some of the broad principles laid down by this Court in several of its decisions and it is unnecessary to burden this judgment with citations. 22. ........The considerations similar to those which weighed with this Court in upholding the Mustard Oil Price Control Order, 1977 in Parg Ice and Oil Mills v. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. This judgment does not decide or lay down any principle. 57] In the case of Uttar Pradesh Power Corporation Ltd. V/s. Ayodhya Prasad Mishra and another reported in (2008) 10 Supreme Court Cases 139 the Hon'ble Supreme Court was considering a question as to whether there ought to be parity for all employees in selection to the promotional posts and nongiving of such parity would violate the doctrine of equality enshrined in Article 14 and 16 of the Constitution. The executive engineers placed in category I and category II are unequals and that is why the classification as made was held to be valid and not violative of Article 14 or 16 of the Constitution of India. The priority given to executive engineers placed in category I over and above the executive engineers found in categoryII for promotional post of Superintendent engineer was upheld by the High Court and that decision came to be confirmed by the Hon'ble Supreme Court of India. We do not find that the principle of law laid down therein, about which there can be no dispute, is of absolute application. That principle will have to be applied to the facts and circumstances in each case. The status and position of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39A not only includes free legal aid by the appointment of counsel for litigants but also includes ensuring that justice is not denied to litigating parties due to financial difficulties. That aspect is taken care of in the present tax set up by excluding from the tax net the individual litigants and services provided to them by individual advocates. Therefore, there is no infraction of the constitutional mandate. 61] Now it is time to refer to the further amendments made to the Finance Act firstly by Mega Notification No.25/2012 dated 20th June, 2012. That mega Notification proceeds to exempt the taxable services mentioned therein from the whole of the service tax leviable thereon under section 66B of the said Act. The said Notification supersedes the earlier notification dated 17th March, 2012. Now, services provided by an Arbitral Tribunal to any person other than a business entity or a business entity with a turn over upto Rs. 10 lakhs in the preceding financial year are exempted from the whole of the service tax leviable thereon under section 66B of the Finance Act. Similarly, services provided by an individual as an advocate or a partnership firm of advocates by way of lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 100%. This Notification merely recognizes the fact that rendering of such services, namely, legal and support to business entities is the trend of the day. Even an Arbitral Tribunal is not placed in the same position as it was and in the initial stages when Arbitration Act 1940 was in force. The position and role of a Arbitrator was very succinctly discussed in a earlier Judgment of the Hon'ble Supreme Court in Food Corporation of India vs. Joginderpal Mohinderpal and Anr. reported in AIR 1989 SC 1263. Hon'ble Mr. Justice Sabyasachi Mukherji as my Lord the Chief Justice of India, then was and known for his erudition and learning in Arbitration and commercial law, observed as under: "6. .....In India, there is a long history of arbitration. Arbitration is a mode of settlement of disputes evolved by the society for adjudication and settlement of the disputes and differences between the parties apart from the courts of law. Arbitration has a tradition, it has a purpose. Arbitration, that is a reference of any particular dispute by consent of the parties to one or more persons chosen by the parties with or without an umpire and an award enforceable by the sovereign power wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the people for whose benefit these processes are resorted to. It is, therefore, the function of courts of law to oversee that the arbitrators act within the norms of justice. Once they do so and the award is clear, just and fair, the courts should, as far as possible, give effect to the award of the parties and make the parties compel to adhere to and obey the decision of their chosen adjudicator." 63] After the Arbitration and Conciliation Act 1996 was enacted, the nature of the disputes referred to and to be resolved by arbitration demonstrate that the same has attained the character of "corporate luxury". The members of the Arbitral Tribunal and those representing parties before the Arbitral Tribunal have started operating in a businesslike manner. It is difficult for individuals to afford the Arbitral services any longer. The hefty fees charged by the Tribunal and the Advocates per day and sometimes per hour make it difficult for litigants including companies to bear the costs of Arbitration. There is no basis for the argument that by the service tax provision section 89 of the Code of Civil Procedure is given a gobye. We are sorry to say this but day after day we receive c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument because the categories of advocates mentioned in these Notifications cannot claim an exemption from the tax and as of right. The legislature having decided to grant the exemption and equally to shift the burden on to the recipient from a particular date, namely, prospectively and not retrospectively by itself does not mean that the doctrine of equality has been violated. If individual advocates and those providing services either individually or collectively to business entities of the classes specified in the two Notifications No.25 and 30/2012 are incomparable, not equally situate, then, all the more, this argument has no basis. The legislature has a choice and very wide in matters of taxation. It can include and exclude from the tax bracket persons or classes of persons. It is free to decide on a cutoff date. Equally it is free to legislate retrospectively in matters of taxation. Similarly, if it decides that a particular provision or an enactment will have prospective operation, the person on whom the burden falls cannot complain that the legislature must give such provision retrospective effect. There is no such right and particularly in matter of taxation. In such circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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