Top legal firms, represented by some of the best-known lawyers, met finance minister Pranab Mukherjee on Wednesday to seek withdrawal of service tax levied on them in the last budget.
But, the best they could get the FM to offer them was a patient hearing without any word on lifting the tax. To top it, the FM assigned these lawyers the task to develop a note on goods and services tax (GST) and direct tax code; a job they promptly agreed to do in a few weeks. Some of the top firms at the meeting included Bhasin & Bhasin Associates, Sagar & Sagar Associates, Luthra & Luthra, and Hammurabi & Solomon.
President, Society of Indian law Firms (SILF), and promoter of Bhasin & Bhasin Associates, Lalit Bhasin said, We approached the FM to rescind the service tax order imposed in the last budget since it was uncalled for and discriminatory. When asked whether the FM gave any indication of heeding their petition, he said, He gave us a patient hearing.
to widen the service tax base, FM in his 2009-10 budget extended the 10 per cent service tax to law firms. He had said the tax would not apply to either lawyers practising alone or to clients who were individuals. Mukherjee had said, Although there is a school of thought that legal consultants do not provide any service to their client, I hold my distinguished predecessor in high esteem and disagree!
The firms argued that it was unfair to target a legal firm while making a distinction between a firm and an advocate. The difference being made between transaction and litigation is not tenable, Bhasin added.
General secretary, SILF, and partner, Hammurabi & Solomon, Manoj Kumar said, We met the FM on a host of issues, which included the service tax on legal firms. Service tax being levied on legal firms tendering advice to firms and not individuals as also individual lawyers tendering advice to firms not being taxed is an anamoly. It has to be corrected. It would anyway be struck down in a court of law.