In a major relief to lakhs of lawyers across the country, the Delhi high court on Friday stayed a Central government notification imposing 10% service tax on them for rendering legal services to their clients. The notification was to come into effect from May 1.
"The notification is stayed," a bench comprising chief justice Dipak Misra and Sanjiv Khanna said. The Delhi High Court Bar Association (DHCBA) had challenged the Centre's notification in this regard. The bench issued notice to Centre seeking response to the petition by May 23, the next date of hearing.
Interestingly, the grievance of the lawyer community was put forward to the court by Additional Solicitor General of India AS Chandhiok, a top law officer of the Government of India. He also happens to be the President of the DHCBA.
Asked about how he could appear in a petition against the Centre, Chandiok told HT: "I am a lawyer first of all and then became the bar association president of the high court. I became the ASG after that. Interest of lawyer community is still supreme in my mind".
As Indian legal industry expands, this year's budget made services provided by business entities to individuals as well as representational and arbitration services by individuals to business entities taxable.
Law firms providing services to individuals as well as individuals providing representational and arbitration services to companies or business entities were included in the service tax net.
Lawyers in the Delhi HC and all the six Delhi districts courts had observed a day-long strike on March 24 after Parliament cleared the Finance Bill 2011 which prescribed 10% service tax on lawyers. Said DHCBA secretary DK Sharma: “What lawyers do is not purely a service for which a tax can be levied. We are assisting the court for dispensation of justice.”