Service tax on representation services by CA

Finance Act, 2011 made the services rendered by legal firms taxable. And with this also rescinded the notification no. 25/2006 vide notification no. 32/2011 which exempted the representation services provided by CAs and CS to their clients. The notification is given below.

However, the matter of taxability of legal services has been protested by lawyers all over the country. And hence The Delhi High Court has stayed till May 23 the imposition of a service tax on ‘Legal Consultancy Services' rendered by lawyers. The Centre's notification was to be implemented from May 1.

Acting on a writ petition filed by the Delhi High Court Bar Association challenging the levy of 10 per cent service tax, a Bench of Chief Justice Dipak Misra and Justice Sanjeev Khanna on Friday asked the government to file a reply within two weeks and listed the case for May 23.

The writ petition (C) 2869 of 2011 was filed before Hon’ble Delhi High Court on 30-04-2011 against Service Tax Notification no. 32 dated 25 April 2011 operative from 01/05/2011, F.No.334/3/2011-TRU, wherein the notification no. 25/2006 has been withdrawn, where in exemption from service tax was granted in reference to representation services by practicing chartered accountants, practicing cost accountant, and practicing company secretaries and thereby bringing all the services provided by them under service tax net.

The said matter came for hearing on 02-05-2011 before Hon'ble Delhi High Court wherein the said notification has been stayed till next date of hearing I.e. 23-05-2011 with notice to UOI. Thereby giving a great relief to CA fraternity.

It is seen that the CAs and lawyers provide similar services to their clients with regard to representations before the various authorities and tribunals. So, any decision with regard to taxability of representation services by lawyers should be similarly applicable to CAs.

With the matter still pending before the honorable Delhi High court, it is to be seen whether the discrimination with the CAs will end and justice prevail

Regards

CA Rohit Gupta