Legal Advice Provided By Advocates Exempted From Service Tax: Orissa High Court

The Orissa High Court has held that the services provided by an Advocate are exempted from levying of Service Tax.

The Court was considering a Writ Petition filed by an Advocate against Notice demanding service tax amounting Rs.2,14,600/- for the Financial Year 2015-16 in terms of Section 73 of the Finance Act, 1994.

The Division Bench of Chief Justice Harish Tandon and Justice BP Routray observed, "......in view of the admitted fact that the Petitioner is a practicing lawyer and the earlier directions issued by this court, as stated above, as well as the instructions issued by the Department the Petitioner is exempted from levy of service tax for such income he derived from his legal service as a Lawyer."

The Petitioner was represented by Advocate M.M. Patnaik, while the Respondent was represented by Senior Standing Counsel T.K. Satapathy.

Facts of the Court

The Department, in the counter-affidavit filed, stated that the demand-cum-show cause notice was issued to the Petitioner under the provisions of Section 73 of the Finance Act, 1994, for non-payment of service tax for he contravened the provisions under Sections 67, 68, 69 and 70 of the Finance Act read with Finance Rules. It was further stated that pursuant to the show cause notice, the Petitioner did not cooperate with the authorities and as such, the adjudication process was completed ex-parte. It was also reiterated that the services provided by an advocate or a Partnership Firm of advocates providing legal services to any person other than a business entity and to a business entity with a turnover up to rupees ten lakhs in the preceding financial year are exempted from levy of service tax.

Reasoning By Court

The Court agreed that the Petitioner is exempted from levying of service tax for income he derived from his legal service as a Lawyer.

"......Thus, the demand-cum-show cause notice dated 15th April, 2021 (Annexure-3) and the order of recovery dated 28th January, 2025 (Annexure-5) are quashed to the extent it relates to demand of service tax from the income of the Petitioner from his profession as an individual lawyer. At the same time we notice that the Petitioner has disclosed his income from house property in the income tax return for the Assessment Years 2018-19 and 2020-21. So it is open for the Department (Opposite Parties) to proceed in respect of the income from house property, if any applicable, to levy service tax in accordance with law," the Court observed.

The Petition was accordingly disposed of.

Cause Title: Shivananda Ray vs. Principal Commissioner CGST and Central Excise Bhubaneswar and Others

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