Dismissing the petition, the court referred to the changing role of the legal profession and held it is no longer limited to appearing before the court. It also pointed out that the classification between legal services provided to business entities and to individuals, for the purpose of levy of service tax, is not discriminatory and does not violate the Constitution.
In addition to their key contention that lawyers are officers of the court and perform a solemn duty in the administration of justice, the petitioners also pleaded: “The levy of service tax imposes a heavy additional burden on litigants and disables them from approach ing the courts.“ The writ petition also said the service tax provision is unconstitutional as it discriminates between ser vices provided to an individual (where there is no tax) and to a large business entity which has to bear the tax burden.
The service tax authorities and the Government of India, who were respondents in the case, argued that even as lawyers provide assistance in administering justice, they do in fact provide services to their clients and are duly compensated in the form of fees which are charged from clients.
The respondents also argued that representational legal services provided to individuals were kept out of the service tax net to ensure the burden is not borne by the common man.
As there was a rational nexus, it was not discriminatory against business entities and this has been the position taken earlier by the Supreme Court.
The HC observed that the legislature, in introducing service tax on the legal profession, noted the commercialization of the practice of law which has expanded in scope and sphere post liberalization and globalization. At the same time the fact that a lawyer is an officer of the court and part and parcel of the administration of justice was not ignored. “Rather by a rational and intelligible differentiation the Parliament has proceeded to levy and impose service tax on legal services rendered to business entities by an individual advocate or law firm,” concluded the HC.