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TMI Blog2022 (9) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... a business entity with a turnover up to Rupees ten lakh in the preceding financial year. It is evident that both the amendments, i.e., amendment dated 01.03.2016 and 06.06.2016, are by way of substitution. Since both the amendments are by way of substitution and the amendment by way of substitution relates back to the original document, as has been held by Hon'ble Apex Court in ZILE SINGH VERSUS STATE OF HARYANA AND OTHERS [ 2004 (10) TMI 553 - SUPREME COURT] and GOVERNMENT OF INDIA VERSUS INDIAN TOBACCO ASSOCIATION [ 2005 (8) TMI 113 - SUPREME COURT] , both the amendments by way of substitution of the provision as contained in the original notification will be deemed to have applicable with effect from the date of notification dated 20.06.2012 - Since both the amendments relate back to the original document, the demand notice issued by the authority concerned for payment of service tax on legal services provided by a Senior Advocate for the period from 01.04.2016 to 05.06.2016 is held to be not sustainable in the eyes of law. Petition allowed. - W.P.(T) No. 4448 of 2021 - - - Dated:- 15-9-2022 - HON BLE THE CHIEF JUSTICE DR. RAVI RANJAN, C.J. AND HON BLE MR. JUST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates directly in terms of the order dated 18.9.2017 passed in W.P.(C) No.2891 of 2016, W.P.(C) No.2892 of 2016 and W.P.(C) No.4186 of 2016 by the Hon ble Delhi High Court (Annexure-9); (v) For the issuance of an appropriate writ / order / direction for quashing and setting aside the notice to show cause cum demand dated 20.10.2021 (Annexure-21) in as much as the same is inter alia in contravention to authoritative judicial pronouncements and the said show cause notice is also further barred by limitation and has been issued in a prejudged and pre-decided manner. 3. The brief facts of the case, as per the pleadings made in the writ petition, which are required to be enumerated read as under :- The writ petitioner happens to be a Senior Advocate practicing in this Court and being aggrieved with the Notification No.18/2016-ST dated 1.3.2016 as under Annexure-3 and Notification No. 9/2016-ST dated 1.3.2016 as under 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 clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Service Tax under Reverse Charge Mechanism was specifically introduced keeping in view that Senior Advocates / Advocates are seated as an officer of the court and in order to enable them to effectively discharge duties as an officer of the court, they were absolved of the compliances and rigors under the Finance Act, 1994 and the Rules made thereunder. However, the respondents, in an attempt to arbitrarily change the existing mechanism, amended the aforementioned notifications vide (i) Notification No.18/2016-ST dated 01.03.2016 (First RCM Amendment Notification) that amended the Mega RCM Notification and (ii) Notification No.9/2016-ST dated 01.03.2016 (First Exemption Amendment Notification) that amended Mega Exemption Notification. Therefore, in terms of the First RCM Amendment Notification, the services provided by a Senior Advocate were allegedly brought outside the ambit of the Mega RCM Notification. The said notification came into force on 01.04.2016. The relevant portion of the First RCM Amendment Notification is reproduced below which reads as under :- 1. In the said notification,- (a) in paragraph 1, in clause (A),- (i) (ii) (iii) in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(a)(i)(b) of Notification No.9/2016-ST, para 1(a)(iii) and (b)(iii) of Notification No.18/2016-ST and para 2(1)(a) of Notification No.19/2016-ST and directing the respondents to continue the Reverse Charge Mechanism for payment of service tax for Senior Advocates under Notification No.30/2012-ST. 5. The respondent Central Goods and Services Tax Central Excise has been called upon and in terms thereof, a counter-affidavit has been filed. 6. Mr. P.A.S.Pati, learned counsel appearing for the respondent Central Goods and Services Tax and Central Excise, has submitted that Notification No.30/2012-ST dated 20.06.2012 has already been amended by virtue of Notification No. 18/2016-ST dated 01.03.2016. Further, Notification No.34/2016-ST dated 06.06.2016 has again amended Notification No.30/2012-ST dated 20.06.2012, in respect of legal services Reverse Charge Mechanism with effect from 06.06.2016. In the backdrop of such amendment, submission has been made that liability of payment of service tax on legal services provided by a Senior Advocate falls under Forward Charge Mechanism for the period from 01.04.2016 to 05.06.2016 and, therefore, the demand notice has been issued for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, and the senior advocate is providing. 100% Therefore, stand has been taken in the counter affidavit that the liability of payment of service tax on legal services provided by a Senior Advocate falls under Forward Charge Mechanism for the period from 01.04.2016 to 05.06.2016. 8. Mr. Sumeet Gadodia, learned counsel appearing for the writ petitioner, submits that Notification No.30/2012-ST dated 20.06.2012 has been amended by way of substitution by virtue of two consecutive notifications, i.e., Notification No. 18/2016-ST dated 01.03.2016 and Notification No.34/2016-ST dated 06.06.2016, and since these amendments have been made by way of substitution, the said amendments will be applicable from the date of the original document i.e., from the date of issuance of Notification dated 20.06.2012, and in that view of the matter, the demand notice issued by the authority, which is impugned in this writ petition, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not by itself affect the retrospective operation of the statutory provision, if such retrospectivity is otherwise apparent. 19. The Constitution Bench in Shyam Sunder v. Ram Kumar [(2001) 8 SCC 24] has held: (SCC p. 49, para 39) Ordinarily when an enactment declares the previous law, it requires to be given retroactive effect. The function of a declaratory statute is to supply an omission or to explain a previous statute and when such an Act is passed, it comes into effect when the previous enactment was passed. The legislative power to enact law includes the power to declare what was the previous law and when such a declaratory Act is passed, invariably it has been held to be retrospective. Mere absence of use of the word declaration in an Act explaining what was the law before may not appear to be a declaratory Act but if the court finds an Act as declaratory or explanatory, it has to be construed as retrospective. (p. 2487). 20. In Bengal Immunity Co. Ltd. v. State of Bihar [AIR 1955 SC 661], Heydon case [(1584) 3 Co Rep 7a : 76 ER 637] was cited with approval. Their Lordships have said: It is a sound rule of construction of a statute firmly establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTION 3, SUB-SECTION (i)] Government of India Ministry of Finance (Department of Revenue) Notification No. 30/2012-Service Tax New Delhi, the 20th June, 2012 GSR. ..(E).-In exercise of the powers conferred by subsection (2) of section 68 of the Finance Act, 1994 (32 of 1994), and in supersession of (i) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 15/2012-Service 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 213(E), dated the 17th March, 2012, and (ii) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2004-Service Tax, dated the 31st December, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 849 (E), dated the 31 st December, 2004, except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value to any person who is not engaged in the similar line of business (b) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business 60% 40% 8. in respect of services provided or agreed to be provided by way of supply of manpower for any purpose 25% 75% 9. in respect of services provided or agreed to be provided in service portion in execution of works contract 50% 50% 10 in respect of any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory Nil 100% Explanation-I. - The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. This notification shall come into force on the 1st day of July, 2012. [F.No. 334/1/2012- TRU] (Raj Kumar Digvijay) Under Secretary to the Government of India Thus, it is evident that the Central Government, vide Notification No.25/2012 dated 20.06.2012 exempted 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. 12. For the present, the relevant provision which is the subject matter of the question is Clause 6 which stipulates about the taxable services and relevant are 6 (b)(i), (b)(ii) and (b)(iii) which are quoted as under :- 6, Services provided by (a) (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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. 5, for the entry under column (2), the following shall be substituted, namely:- in respect of services provided or agreed to be provided by a firm of advocates or an individual advocate other than a senior advocate by way of legal services ; (iv) against Sl. No. 6, in column (2), the words by way of support services shall be omitted. 2. This notification shall come into force on the 1st day of April, 2016. [F.No. 334 /08/ 2016-TRU] (K. Kalimuthu) Under Secretary to the Government of India Subsequently, the said notification has further been amended by way of substitution vide Notification No.34/2016-ST dated 06.06.2016, which reads as hereunder:- [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) NOTIFICATION No. 34/2016-Service Tax New Delhi, the 6th June, 2016 G.S.R.____(E).- In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following further amendments in the notification of the Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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