TEAM CODE: B-3010

RGNUL INTRA MOOT COURT COMPETITION, 2016

IN THE HIGH COURT OF DOMBA

CASE CONCERNING EXCLUSION OF SENIOR

ADVOCATES FROM LEVYING OF SERVICE TAX VIA
REVERSE CHARGE MECHANISM

AYUSHMAAN VAJPAYEE
(PETITIONER)

V.

UNION OF ZAMBA
(RESPONDENT)

WRIT PETITION NO.___/2016

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-TABLE OF CONTENTS-

-TABLE OF ABBREVIATIONS- ........................................................................................ III

-LIST OF AUTHORITIES- .................................................................................................. IV
-STATEMENT OF JURISDICTION- .................................................................................. V
-STATEMENT OF FACTS- ................................................................................................. VI
-ARGUMENTS PRESENTED- ......................................................................................... VIII
-SUMMARY OF ARGUMENTS- ........................................................................................ IX
-ARGUMENTS ADVANCED- ............................................................................................. XI
1.

That Senior Advocates form a separate class of advocates for the purposes of

Finance Act, 1994 and thus satisfies the test of Article 14 of the Constitution of
Zamba. ................................................................................................................................. XI
2.

That the reverse charge mechanism of Notification No.30/2012-ST dated

20.06.2012 is applicable and effective for individual advocates including Senior

Advocates and the service tax shall be payable by the recipient of services for the
services provided and rendered by all individual advocates including Senior
Advocates. ...................................................................................................................... XVI
3.

That Notification No. A/2016-ST, Notification No. B/2016-ST and Notification No.

C/2016-ST are constitutional and not ultra vires of Article 14 and 265 of the
Constitution of Zamba. ................................................................................................ XVIII
-PRAYER- ............................................................................................................................ XX

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-TABLE OF ABBREVIATIONSABBREVIATIONS

EXPANSIONS

AIR

ALL INDIA REPORTER

Anr.

ANOTHER

Del.

DELHI HIGH COURT

HC

HIGH COURT

Honble

HONORABLE

Mad

MADRAS HIGH COURT

MLJ

MADRAS LAW JOURNAL

Ors.

OTHERS

SC

SUPREME COURT

SCC

SUPREME COURT CASES

u/A

UNDER ARTICLE

u/s

UNDER SECTION

w.e.f.

WITH EFFECT FROM

PERCENTAGE

SECTION

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-LIST OF AUTHORITIESCASES
Page No.

1. Amalgamated Tea Estates Co. Ltd v. State of Kerala..................................XIII

2. Ashutosh Gupta v. State of Rajasthan.............................................................XIII
3. Bengal Immunity Co. Ltd. v. State of Bihar...................................................XIV
4. Chiranjit Lal Choudhary v. Union of India.......................................................XI
5. Ganga Sugar Corpn. Ltd. v. State of U.P.........................................................XIV
6. Govt. of A.P. v. P. Laxmi Devi........................................................................XIII
7. I.R. Coelho v. State of T.N..................................................................................XI
8. I.T.O. Tuticorn v. T.S.Devinatha Nadai...........................................................XIV
9. J.R. Parashar v. Bar Council of India................................................................XII
10. Khazan Chand v. State of J&K.........................................................................XVI
11. Marri Chandra Sekhar Rao v. Dean G.S. Medical College.............................XI
12. Mohan Das v. State of Karnataka.....................................................................XV
13. R. Kaaruppan v. Govt. of India...........................................................................XI
14. R.K. Dalmia v. S.R. Tendolkar...........................................................................XI
15. R.K. Garg v. Union of India............................................................................XIII
16. Rajasthan Government v. Its Employees..........................................................XI
17. S. Gopalan v State of Madras...........................................................................XVI
18. Satyawati Sharma v. Union of India.................................................................XV
19. State of A.P. v. N.R. Reddi................................................................................XII
20. State of Kerala v. M/s Travancore Chemicals and Manufacturing Co.....XIV
21. State of M.P. v. Rakesh Kohli.............................................................................XI

STATUTES
1. The Constitution of India, 1950......................................................................XII
2. Finance Act, 1994.............................................................................................XI

BOOKS
1. DURGA DAS BASU, COMMENTARY ON THE CONSTITUTION OF INDIA ,
6135 (8th ed. Lexis Nexis)...................................................................................XI

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-STATEMENT OF JURISDICTIONThe petitioners have approached the Honble Domba High Court under Article 226 of the
Constitution of Zamba. It is most humbly and respectfully submitted before this Honble
High Court that it has the requisite committal, territorial and subject matter jurisdiction to
entertain and adjudicate this matter under Article 226(1) read with Article 226(2) of the
Constitution of Zamba, in this case. The respondents respectfully submit to this jurisdiction
invoked by the petitioners.
The present memorandum sets forth the facts, contentions and the pleadings.

Article 226: Power of High Courts to issue certain writs.

Article 226(1): Notwithstanding anything in Article 32 every High Court shall have power,
throughout the territories in relation to which it exercises jurisdiction, to issue to any person
or authority, including in appropriate cases, any Government, within those territories
directions, orders or writs.
Article 226(2): The power conferred by clause (1) to issue directions, orders or writs to any
Government, authority or person may also be exercised by any High Court exercising
jurisdiction in relation to the territories within which the cause of action, wholly or in part,
arises for the exercise of such power, notwithstanding that the seat of such Government or
authority or the residence of such person is not within those territories.

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-STATEMENT OF FACTSBACKGROUND
Ayushmaan Vajpayee the Petitioner has been designated as a Senior Advocate under the
Advocates Act, 1961 after practicing law for almost 15 years, enrolled under the Bar Council
of Domba.
In the year 2009, an activity described as Legal Consultancy Services came to be specified
as taxable service under the Finance Act, 1994 and accordingly services in the nature of
advice, consultancy or assistance in any branch of law was brought under the service tax levy.
However, this levy was imposed only on a business entity when it provided such services to
another business entity.
In 2010, the scope of the term Legal Consultancy Services was expanded and the tax was
now levied on advice, consultancy or technical assistance provided in the field of law.
In the year i.e. 2011, a new definition of taxable service in the nature of Legal Consultancy
Services came to be enacted, and Section 65(105)(zzzzm) of Finance Act, 1994 was
substantially amended. Individuals providing legal services were also covered within the
scope of the above referred taxable service by virtue of this amendment because the exclusion
of individuals providing the above type of services was removed and thus, advocates now
were under the said levy including the Senior Advocates.
This was subsequently opposed by advocates and various petitions were filed before the
respective High Courts and appropriate interim stay orders and protection have been granted
by Honble Ganawar High Court, Honble Drindan High Court, Honble Auring High Court,
Honble Mazar High Court and Honble Calabar High Court.
However, notwithstanding the stay and interim protection orders rendered by various Honble
High Courts, advocates (including the Petitioner) were paying service tax on the value of
legal services provided by them and similarly, service tax returns were also filed for such
services in accordance with the provisions of Section 70 of the Finance Act, 1994.

INTRODUCTION OF REVERSE CHARGE MECHANISM

In Finance Act, 2012, the Central Government issued a Notification No.25/2012-ST dated
20.06.2012, w.e.f. 01.07.2012 exempting various taxable services including the services
provided by an individual as an Advocate or a partnership of Advocates by way of legal
services. Simultaneously, another Notification No.30/2012-ST dated 20.06.2012 w.e.f.

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01.07.2012, and a method known as Reverse Charge Mechanism, was introduced by virtue
of this Notification, laying down that service tax was payable by individual advocate or a firm
of advocates by way of legal services by the recipient of such service. Also, Rule 2(1)(d) of
the Service Tax Rules, 1994, persons liable for paying service tax in relation to services
provided or agreed to be provided by an individual Advocate or a firm of Advocates came to
be defined as the recipient of such service. Under Notification No.25/2012-ST, the term
Advocate was defined as having the meaning assigned to it in Section 2(1)(a) of the
Advocates Act, 1961.
As a result, the levy on the Advocates services was enforced, but the recovery and collection
of service tax were to be made from the recipient of such service under the reverse charge
mechanism.
EXCLUSION

OF

SENIOR

ADVOCATES

FROM

REVERSE

CHARGE

MECHANISM
In 2016, the Central Government issued a Notification No.A/2016-ST dated 01.03.2016,
which was to come into force with effect from 01.04.2016, and exemption allowed under the
parent Notification No.25/2012-ST to individual advocates and partnership firm of advocates
is proposed to be denied in case of Senior Advocates.
By issuing another Notification No.B/2016-ST dated 01.03.2016, which was to come into
force from 01.04.2016, Notification No.30/2012-ST for reverse charge mechanism was
proposed to be amended and only Senior Advocates were proposed to be excluded from
Reverse Charge Mechanism which is otherwise applicable to all individual advocates and
firm of advocates.
By another Notification No.C/2016-ST dated 01.03.2016, w.e.f. 01.04.2016, Rule 2(1)(d)(D)
of the Service Tax Rules was proposed to be amended and only Senior Advocates were
proposed to be excluded from the definition of the term person liable for paying service tax
under which, till now, the recipients of legal consultancy services (i.e. the clients) have been
the persons liable to pay service tax in case of services provided by individual advocates or a
firm of advocates.
The net effect of the above amendments, was that only Senior Advocates like the Petitioner
herein shall be subjected to the rigors of the provisions of the Finance Act and the Rules
framed there under, and accordingly the Petitioner herein shall have to obtain a service tax
registration and he shall also have to pay service tax on the value of legal services rendered
by them and procedures like filing of service tax returns were also to be followed.

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-ARGUMENTS PRESENTED-

I.

THAT SENIOR ADVOCATES FORM A SEPARATE CLASS OF ADVOCATES

FOR THE PURPOSES OF FINANCE ACT, 1994 AND THUS, SATISFY THE
TEST OF ARTICLE 14 OF THE CONSTITUTION OF ZAMBA.

II.

THAT THE REVERSE CHARGE MECHANISM OF NOTIFICATION NO.30/2012ST DATED 20.06.2012 IS APPLICABLE AND EFFECTIVE FOR INDIVIDUAL
ADVOCATES INCLUDING SENIOR ADVOCATES AND THE SERVICE TAX
SHALL BE PAYABLE BY THE RECIPIENT OF SERVICES FOR THE SERVICES
PROVIDED

AND

RENDERED

BY

ALL

INDIVIDUAL

ADVOCATES

INCLUDING SENIOR ADVOCATES.

III.

THAT NOTIFICATION NO.A/2016-ST, NOTIFICATION NO.B/2016-ST AND

NOTIFICATION NO.C/2016-ST ARE CONSTITUTIONAL AND NOT ULTRA
VIRES ARTICLES 14 AND 265 OF THE CONSTITUTION OF ZAMBA.

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-SUMMARY OF ARGUMENTSI.

THAT SENIOR ADVOCATES FORM A SEPARATE CLASS OF

ADVOCATES FOR THE PURPOSES OF FINANCE ACT, 1994 AND
THUS, SATISFY THE TEST OF ARTICLE 14 OF THE CONSTITUTION
OF ZAMBA.

The Senior Advocates form a separate class from other advocates, by the virtue of
attainment, u/s 16 of the Advocates Act, 1961 which is evidently based on intelligible
differentia. The given classification is consistent to the objects sought by the impugned Act,
i.e., to generate the revenue for the government exchequer. Furthermore, the Legislature
enjoys wider latitude while classifying objects or persons for the purpose of taxation and the
Court shall presume the constitutionality of the legislation unless it is grossly arbitrary and
unconstitutional. Hence, the classification is tangible and rational.

II.

THAT THE REVERSE CHARGE MECHANISM OF NOTIFICATION

NO.30/2012-ST DATED 20.06.2012 IS APPLICABLE AND EFFECTIVE
FOR INDIVIDUAL ADVOCATES INCLUDING SENIOR ADVOCATES
AND THE SERVICE TAX SHALL BE PAYABLE BY THE RECIPIENT
OF SERVICES FOR THE SERVICES PROVIDED AND RENDERED BY
ALL INDIVIDUAL ADVOCATES INCLUDING SENIOR ADVOCATES.

Notification No.30/2012-ST is applicable and effective for individual advocates, inclusive of

Senior Advocates, w.e.f. 01.07.2012 as the Legislature has the authority to levy and collect
tax from the recipient itself u/A 265 of the Constitution of Zamba since Section 68(2) of the
Service Tax Rules vests the power with the Government to levy taxes on such person it
deems fit, for the purpose.

III.

THAT NOTIFICATION NO.A/2016-ST, NOTIFICATION NO.B/2016-ST

AND NOTIFICATION NO.C/2016-ST ARE CONSTITUTIONAL AND NOT
ULTRA VIRES ARTICLES 14 AND 265 OF THE CONSTITUTION OF
ZAMBA

In the instant case Notification No.A/2016-ST, Notification No.B/2016-ST and Notification

No.C/2016-ST have been issued by the Central Government and are not ultra vires of Article

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14 and 265 of the Constitution of Zamba since they do not abridge the fundamental right of
Senior Advocates u/A 14 of the Constitution because the impugned notifications are not
discriminatory as they are under the ambit of principle of reasonable classification, permitted
under Article 14 of the Constitution of Zamba. Moreover, the Legislature can exercise the
freedom of wider latitude while classifying objects or persons for the purpose of taxation as
reiterated in various cases. Moreover, Article 265 of the Constitution enables the Legislature
to levy tax (here, service tax) in a manner it deems fit, reinforced by Section 68(2) of the
Finance Act, 1994.

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-ARGUMENTS ADVANCED1. That Senior Advocates form a separate class of advocates for the purposes of
Finance Act, 1994 and thus satisfies the test of Article 14 of the Constitution of
Zamba.
Article 14 of the Constitution of India safeguards ones right to equality, however, the said
equality secured under article 14 doesnt mean absolute equality, which is a human
impossibility. Thus, the right to equality enshrined under article 14 is a comparative concept.1
It has been held in the case of Marri Chandra Sekhar Rao v. Dean G.S. Medical College 2 that
all persons are not equal by their nature, attainment or circumstances and therefore, a
mechanical equality before the law may result in injustice. Also, the varying needs of
different classes of persons often require separate treatment3.
It has been held in the case of R. Kaaruppan v. Govt. of India4 that the Legislature must have
power to make laws distinguishing, selecting and classifying persons and things upon which
its laws are to operate.
Stating it as Positive Discrimination, the Honble Supreme Court in Rajasthan Government
v. Its Employees5, held: ...Article 14 which guarantees equality before law has a caveat
under which the State still has the power to differentiate among different classes of people.
It has been held by the Honble SC that the principle of equality u/A 14 does not take away
from the state the power of classifying persons for legitimate purposes6.
Article 14, thus, permits reasonable classification for the purposes of legislation. Certain tests
were laid down by the Honble SC in the landmark case of R.K. Dalmia v. S.R. Tendolkar7,
to determine the question of reasonableness of a classification, these are:(a) That the classification must be founded on intelligible differentia which distinguishes
persons or things that are grouped together from others left out of the group; and
(b) That, the differentia must have a rational nexus to the object sought by the impugned
act.

I.R. Coelho v. State of T.N., A.I.R. 2007 SC 861.

1990(3) SCC 130.
3
Chiranjit Lal Choudhary v. Union of India, A.I.R. 1951 SC 41.
4
A.I.R. 2008 Mad. 264.
5
A.I.R. 2012 SC 1913.
6
State of M.P. v. Rakesh Kohli, A.I.R. 2012 SC 2351.
7
A.I.R. 1958 SC 538.
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A. That

the classification must be founded on intelligible differentia which

distinguishes persons or things that are grouped together from others left out of
the group
In the instant case, it must be accentuated that the Advocates Act, 1961 clearly distinguishes
advocates in two classes, namely, Senior Advocates and other advocates8. The following
classification is legitimate, real, rational and not arbitrary since it is based on palpable criteria
such as legal acumen, special knowledge and standing, seniority in the roll of advocates and
such designation and distinction is awarded after the Honble SC or HC is of the opinion that
the individual advocate in question is worthy of such distinction and recognition9.
Senior Advocates are given certain privileges such as the right of pre audience in the Court10.
Senior Advocates are also to refrain from doing certain acts as laid down by the Bar Council
of India Rules11.
Therefore, the distinction between Senior Advocates and other advocates is tangible and
based on rational criteria and thus, the said distinction doesnt abridge the right to equality
bestowed by the constitution of Zamba u/A 14 of the Constitution. The distinction is not
violative of Art 14 as the classification is based on intelligible differentia.
The Senior Advocates constitute a different class within advocates which is based on the
ability, knowledge, experience, expertise and standing at the Bar, an advocate is designated as
Senior Advocates. It is an honour and distinction conferred by the Court in recognition of the
ability and standing of the advocate concerned. Conferment of distinction and honour by the
Court within advocates cannot be assailed as creation of class within a class, violative of
Article 14 of the Constitution of India. The conferment of designation as a Senior Advocate
was based on the collective wisdom of the Court and could not be assailed as arbitrary12.
It has been further held by the Honble SC that mere differentiation or inequality of treatment
does not per se amount to discrimination13.
B. That, the differentia must have a rational relation to the object sought by the act.
The object of any economic statute or a taxation statute enacted by the Legislature is to
generate revenue sufficient to ensure efficient functioning of the government and for that
8

Advocates Act, 1961, 16.

Id.
10
Advocates Act, 1961, 23.
11
Bar Council of India Rules, Part V.
12
J.R. Parashar v. Bar Council of India, A.I.R. 2002 Del 482.
13
State of A.P. v. N.R. Reddi, A.I.R. 2001 SC 404.
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purpose the Legislature has the right to enact laws. The Legislature is the best judge of its
own cause and its people and it has the right to enact laws for the betterment of the society it
governs. Therefore, special considerations shall be conferred to the Legislature while judging
the constitutionality of taxing statutes14.
In the matter of taxation, the Legislature has greater latitude for classification, to give effect
to its policy of raising revenue and for that purpose selecting persons or object it will tax15.
Thus, it is open to the state to decide, the basis of taxation and to alter the same, from time to
time.
Greater latitude of classification shall be conferred to the Legislature in respect of taxation
statutes and crudities, inequities, abuse or immorality arising out from the same doesnt
constitute valid grounds for holding the said statute as unconstitutional. Laws relating to
economic activities should be viewed with greater latitude than laws touching civil rights.
The Courts must be liberal, dynamic and resilient while examining the constitutional validity
of legislations in economic matters.
It is well settled that Art 14 doesnt require that the legislative classification should be
scientifically or logically perfect16.
The classification may be founded on different bases, such as, geographical, or according to
object or occupations or the like.17In the instant case, the classification is based on two
grounds, namely the distinction in occupation and the difference in nature of work done by
the two classes of advocates18.
The classification u/A 14 is not inflexible and doctrinaire. It gives due regard to the complex
necessities and intricate problems of Govt. Thus, as revenue is the first necessity of the State
and taxes are raised for various purposes and by an adjustment of diverse elements, the Court
grants to the state greater choice of classification in the field of taxation than in other
spheres19.
A tax statute is construed strictly and hardship is not relevant in constructing taxing statutes20.

14

R.K. Garg v. Union of India, A.I.R. 1981 SC 2138.

Supra note 6.
16
Ashutosh Gupta v. State of Rajasthan, A.I.R. 2002 SC 1533.
17
Supra note 7.
18
Supra note 10.
19
Amalgamated Tea Estates Co. Ltd v. State of Kerala, A.I.R. 1974 SC 849.
20
Govt. of A.P. v. P. Laxmi Devi, A.I.R. 2008 SC 1640.
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It has been held by the Honble SC that the Court shall not be called upon to discard the
cardinal rule of interpretation for mitigating a hardship when the Constitution itself has
expressly provided for another authority more competent to evaluate the correct position to do
the needful21.
Furthermore, it has been held by the Honble SC that there is no necessity of equity in tax
law22. This was a reiteration of what was held in I.T.O. Tuticorn v. T.S.Devinatha Nadai23.
It has further been held by the Court that the Legislature has, depending on the situation,
freedom to choose the basis for classification and the Court cannot substitute a different
criterion which it commends to be proper24.
The Legislature understands and appreciates the need of the people and the laws it enacts are
directed to problems which are made manifest by experience and that the elected
representatives assembled in a Legislature enact laws which they consider to be reasonable
for the purpose for which they are enacted. Presumption is, therefore, in favour of the
constitutionality of an enactment.25
If there is a classification, the Courts, will not hold it invalid merely because the law might
have been extended to the person who in some respects might resemble the class for which
the law was made, for the Legislature is the best judge of the needs of the particular classes
and to estimate the degree of evil so as to adjust its legislation according to the exigency
found to exist26.
In view of intrinsic complexity of fiscal adjustments, the state has a wider discretion in
classifying for taxing purposes.27
In State of MP v Rakesh Kohli,28 the Apex Court observed that while dealing with
constitutional validity of a taxation law, the Court must have regard to the following
principles:
(i)

That, there is always presumption in favour of constitutionality of a law, made by

Parliament or State Legislature;

21

Bengal Immunity Co. Ltd. v. State of Bihar, A.I.R. 1955 SC 661.

Supra note 20.
23
A.I.R. 1968 SC 623.
24
Ganga Sugar Corpn. Ltd. v. State of U.P., A.I.R. 1980 SC 286.
25
Supra note 3.
26
Id.
27
State of Kerala v. M/s Travancore Chemicals and Manufacturing Co., A.I.R. 1999 SC 230.
28
Supra note 6.
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(ii)

That, no enactment can be struck down by just saying that it is arbitrary or

unreasonable or irrational, but some constitutional infirmity has to be found;

(iii)

That, the Court is not concerned with the wisdom or unwisdom, the justice or
injustice of the law as the Legislatures are supposed to be alive to the needs of the
people whom they represent and they are the best judge of the community by
whose suffrage they come into existence;

(iv)

That, hardship is not relevant in pronouncing on the constitutional validity of a

fiscal statute or economic law; and

(v)

That, in the field of taxation, the Legislature enjoys greater latitude for
classification.

Arguendo, it may, be noticed that the doctrine of reasonable classification based on nexus
test, is no longer a paraphrase of article 14, nor is it the objective and end of that article. The
emphasis is now on the rule that art 14 strikes at arbitrariness29 and with the aforementioned
arguments that there remains no iota of doubt with the fact that the classification is rational
and legitimate and distant from being arbitrary.
Also, it is evident from general practice in various Honble High Courts that the eligibility
criteria for designation of Senior Advocates, the annual income of such individuals has a
certain threshold, as in the case of Honble Sikkim HC30, Honble Himachal Pradesh HC31,
Honble Madhya Pradesh HC32, Honble Madras HC33, Honble Punjab & Haryana HC34, and
many more.
Thus, it is implicit from the given practice that the Senior Advocates attract a higher value
of legal service than the other advocates and it, therefore, gives the Legislature to levy tax on
such Senior Advocates on the basis of economic superiority, as held in the case of Mohan Das
v. State of Karnataka35.

29

Satyawati Sharma v. Union of India, A.I.R. 2008 SC 3148.

Notification No.8/HCS dated 05.06.2009.
31
Notification No. HHC/Rules/Adv./96-1- dated 18.07.2009.
32
Rule 7(b), High Court of Madhya Pradesh (Designation of Senior Advocates) Rules, 2012.
33
Notification No. 298 dated 24.10.2013.
34
Ch.6-C., Part C- Procedure for Enrolment of Senior Advocates dated 19.03.2014.
35
A.I.R. 2005 SC 2178.
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2. That the reverse charge mechanism of Notification No.30/2012-ST dated
20.06.2012 is applicable and effective for individual advocates including Senior
Advocates and the service tax shall be payable by the recipient of services for
the services provided and rendered by all individual advocates including Senior
Advocates.
Article 265 of the Constitution of India provides that No tax shall be levied or collected
except by authority of law which explicitly means that the power to tax is considered to be
an inherent sovereign power of the state and the constitutional provisions with respect to
taxation are considered as limitations on power to tax. Everything which is subject to the
sovereign power is proper object of taxation. Therefore, levying on service tax on services
enumerated in the respective Act, within the territorial jurisdiction of the Government and the
Legislature, shall be held constitutionally valid. For this purpose, the term law in this Article
means statute law, i.e., an Act of the Legislature36.
In Khazan Chand v. State of J&K37, the Court observed that power to make law with respect
to tax comprehends within it the power to levy that tax and to determine the persons who are
liable to pay such tax, the rate at which tax is to be paid and the event which will attract
liability in respect of such tax. The power to make a law with respect to a tax includes the
power to make provisions in relevant statute with respect to all matters ancillary and
incidental to the levy, assessment, collection and recovery of tax.

Person liable to pay service tax is governed by Finance Act, 1994 which consists Service Tax
Rules, 1994 in Chapter V of the Finance Act, under the aegis of Government of Zamba.
Therefore, Finance Act, 2012 is an act in consonance with the Constitution of India as it is an
amendment of the Finance Act, 1994, promulgated by the Legislature.

Section 66 of the Finance Act, 2012 provides for levy of service tax at the rate of twelve per
cent of the value of service defined under Section 65(105)(zzzzm) of the same Act, among
others38.

36

S. Gopalan v State of Madras, (1958) 2 MLJ 117.

[1984] 2 SCC 456.
38
Finance Act, 1994, No.32, 1994.
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Section 65(105)(zzzzm)(ii) gives definition for the purpose of service tax as follows:
taxable service means any service provided or to be provided, to any business entity, by
any person, in relation to representational services before any Court, tribunal or authority.39
Section 66B of the Finance Act, 1994 states that, There shall be levied a tax (hereinafter
referred to as the service tax) at the rate of twelve per cent on the value of all services, other
than those services specified in the negative list, provided or agreed to be provided in the
taxable territory by one person to another and collected in such manner as may be prescribed
and the services provided under the definition of Legal Consultancy Services does not fall
under the ambit of negative list as laid under Section 66D of the Finance Act, 1994 and is,
henceforth, taxable by virtue of Section 68(1) of the Finance Act, 1994 40, which states that
Every person providing taxable service to any person shall pay service tax at the rate
specified in section 66B in such manner and within such period as may be prescribed.
Further, Rule 2(a) of Notification No.25/2012-ST41 defines Advocate as the meaning
assigned to it in Section 2(1)(a) of the Advocates Act, 1961 which defines Advocate as an
advocate entered in any roll under the provision of Advocates Act, 196142.
Thus, all the advocates who are enrolled according to provisions of the above Act are under
the ambit of Service Tax by the appropriate authority (ies).
Rule 1(A)(iv)(B) of Notification No.30/2012-ST43 notifies that the services provided or
agreed to be provided by an individual advocate or a firm of advocates by way of support
services under the class of taxable services as well as Rule 1(B)(II)(5)44 provides for 100% of
service tax to be payable by the person receiving the service in respect of services provided or
agreed to be provided by individual advocate or a firm of advocates by way of legal services.
These Rules are reinforced by Section 68(2) of Finance Act, 1994 45 which vests the Central
Government with the authority to tax any such person and in any manner as may be
prescribed at the rate specified in Section 66 of the Act and all the provisions Chapter V of
the Finance Act, 1994 as if he is the person liable for paying the service tax in relation to such
service.

39

Id.
Ibid.
41
Notification No.25/2012-ST dated 20.06.2012.
42
Supra note 8.
43
Notification No.30/2012-ST dated 20.06.2012.
44
Id.
45
Supra note 38.
40

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Thus, the aforementioned Rules and Sections pave way for legitimate authority to levy and
collect taxes on the services provided by all the advocates (including the Senior Advocates)
by the method of Reverse Charge Mechanism, i.e., the recipient of the services mentioned
above shall be liable to pay the service tax.
Therefore, the Act provides the Legislature with vested power in levying taxes on the services
provided by the advocates, including Senior Advocates (including the Petitioner herein) via
Reverse Charge Mechanism.
3. That Notification No. A/2016-ST, Notification No. B/2016-ST and Notification
No. C/2016-ST are constitutional and not ultra vires of Article 14 and 265 of the
Constitution of Zamba.
In view of the above two arguments advanced, wherein it has been contended that:(i)

The classification between Senior Advocates and other Advocates is rational,

tangible and legitimate and is formed on the basis of intelligible differentia and is
in consonance with the object sought by the impugned Act, i.e., Finance Act,
1994, thus, they form a separate class of advocates for the purposes of Finance
Act, 1994 and therefore, satisfy the test of Article 14 of the Constitution of Zamba.

(ii)

That the reverse charge mechanism of Notification No.30/2012-ST dated

20.06.2012 is applicable and effective for individual advocates including Senior
Advocates and the service tax shall be payable by the recipient of services for the
services provided and rendered by all individual advocates including Senior
Advocates, since Section 68(2) vests the power with the Legislature to levy tax
on services enumerated u/s 65, 66 of Finance Act, 1994, Notification No.25/2012ST and Notification No.30/2012-ST dated 20.06.2012, all under the ambit of
Article 265 of the Constitution of Zamba.

(iii)

That the Legislature enjoys a wide latitude in deciding the classification sought for
the purposes of taxation and the constitutionality of such economic legislation
shall be presumed by the Courts unless it is grossly arbitrary, which in the instant
case, is not present.

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Thus, denial of exemption under the parent Notification No.25/2012-ST to the Senior
Advocates via Notification No.A/2016-ST46, the exemption of Senior Advocates from
Reverse Charge Mechanism by the virtue of Rules 1(a)(i)(b) & 1(a)(i)(c) of Notification
No.B/2016-ST47, wherein, Senior Advocates are defined in Rule 1(b)(iii) as defined u/s
16of the Advocates Act, 1961 and the exclusion of Senior Advocates from Rule 2(1)(d)(D)
of the Service Tax as proposed under Notification No.C/2012-ST48 with is totally
constitutional and not ultra vires Article 14 and 265 of the Constitution of Zamba.
This is because Article 265 of the Constitution vests the power with the Legislature to levy
taxes as well as classifying object or persons for this purpose, which in this case there remains
absolutely no iota of doubt upon the rationality of the impugned classification. Henceforth,
the impugned Notifications shall be upheld constitutional in toto.

46

Notification No.A/2016-ST dated 01.03.2016.

Notification No.B/2016-ST dated 01.03.2016.
48
Notification No.C/2016-ST dated 01.03.2016.
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-PRAYERWherefore in the light of questions presented, arguments advanced and authorities cited,
respondent requests to this honourable Court to find, adjudge and declare thatI.

That Senior Advocates form a separate class of advocates for the purposes of
Finance Act, 1994 and thus, satisfy the test of Article 14 of the Constitution of Zamba.

II.

That the reverse charge mechanism of Notification No.30/2012-ST dated 20.06.2012

is applicable and effective for individual advocates including Senior Advocates and
the service tax shall be payable by the recipient of services for the services provided
and rendered

III.

by all

individual advocates

including

Senior

Advocates.

That Notification No.A/2016-ST, Notification No.B/2016-ST and Notification

No.C/2016-ST are constitutional and not ultra vires Articles 14 and 265 of the
Constitution of Zamba.

And therefore, the petition invoked by the Petitioner before this Honble Court, be quashed,
in the light of justice.

Pass any other order it may deem fit, in the interest of Justice, Equity and Good conscience.
And for this act of kindness the respondent shall as duty bound ever humbly pray.

(Respectfully Submitted)
-COUNSEL ON BEHALF OF RESPONDENTS-

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