The Bombay High Court in Manisha Rajiv Shroff v. Union of India & Ors. held that service tax cannot be levied on legal services provided by an individual advocate to a partnership firm of advocates, as such services are exempt under Notification Nos. 25/2012-ST and 30/2012-ST dated 20 June 2012. The case arose after tax authorities issued a show cause notice alleging mismatch between income tax data and service tax returns for FY 2016-17 and later confirmed a demand of about ₹26.81 lakh, along with interest and penalty, followed by recovery proceedings and freezing of bank accounts. The petitioner challenged the demand contending that the services were exempt and that proceedings were initiated without proper service of notice. The High Court observed that the issue was already settled by an earlier judgment and that the notifications clearly exempt legal services rendered by advocates to other advocates or law firms, with nil service tax liability on the service provider. Consequently, the Court held that the tax officer lacked jurisdiction and quashed the show cause notice, adjudication order, and recovery proceedings.
Facts:
Manisha Rajiv Shroff (“the Petitioner”), an advocate enrolled with the Bar Council of Maharashtra and Goa since February 05, 2007, was issued a show cause notice dated October 27, 2021 alleging mismatch between Income Tax data and Service Tax returns and proposing service tax demand for FY 2016-17.
Union of India & Ors. (“the Respondent”) adjudicated the proceedings and passed an order-in-original dated March 15, 2023 confirming service tax liability of approximately Rs. 26.81 lakhs with interest and penalty, followed by a recovery notice dated October 31, 2025 and creation of lien and freezing of bank accounts.
The Petitioner contended that service tax was not leviable on services provided by an advocate to a partnership firm of advocates and alternatively that such services were taxable, if at all, under reverse charge mechanism. The Petitioner also contended that principles of natural justice were violated as notices were sent to an old address and were not received.
The Respondent contended that proceedings were initiated on the basis of third-party data showing mismatch between income declared and service tax liability and that service tax liability had been correctly confirmed.
Aggrieved by the order-in-original confirming tax, the recovery proceedings and freezing of accounts, the Petitioner approached the High Court by way of a writ petition under Article 226 of the Constitution of India seeking quashing of the show cause notice, adjudication order and recovery notice.
Issue:
Whether service tax could be levied on legal services rendered by an individual advocate to a partnership firm of advocates in view of Notification Nos. 25/2012-ST and 30/2012-ST dated June 20, 2012, and whether proceedings confirming such levy were without jurisdiction?
Held:
The Hon’ble Bombay High Court in Writ Petition (L)No. 1684 of 2026 held as under:
- Observed that, the controversy was covered by the decision of the Court in Advocate Pooja Patil v. Deputy Commissioner, CGST and CX Division VI [(2024) 15 Centax 124 (Bom.)], where it was held that service tax was not leviable on legal services rendered by an individual advocate in view of the relevant notifications.
- Noted that, Notification No.25/2012-ST dated June 20, 2012 exempted legal services provided by an individual advocate or partnership firm of advocates to an advocate or partnership firm of advocates, and Notification No.30/2012-ST specified that the extent of service tax payable by the service provider in respect of legal services by an individual advocate was “Nil.”
- Observed that, in view of the binding notifications, the designated officer would not have jurisdiction to proceed with the demand of service tax on such services.
- Noted that, the impugned order was passed contrary to the notifications and without considering the binding legal position.
- Held that, the present proceedings were covered by the notifications and the earlier judgment in Advocate Pooja Patil, and the petition was allowed, quashing the impugned order, show cause notice and recovery proceedings.
Our Comments:
In the case of P.C. Joshi v. Union of India [(2015) 37 STR 6 (Bom.)], levy of service tax on advocates had been considered, and the decision had been stayed by the Supreme Court. Further in Madhu Sudan Mittal v. Union of India [2023 (70) GSTL 124] the Hon’ble Jharkhand High Court, noted that where demand notices for service tax on legal services provided by advocates were held not sustainable.
Relevant Provisions:
Notification No. 25/2012-Service Tax dated June 20, 2012
“G.S.R……..(E).-In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) and in supersession of notification number 12/2012-Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 210 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely:-
…
6. Services provided by–
(a) an arbitral tribunal to –
(i) any person other than a business entity; or
(ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year;
(b) an individual as an advocate or a partnership firm of advocates by way of legal services to,- (i) an advocate or partnership firm of advocates providing legal services;”
Notification No. 30/2012-Service Tax dated June 20, 2012
“GSR……(E).—–In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), and in supersession of (i) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 15/2012-Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 213(E), dated the 17th March, 2012, and (ii) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2004-Service Tax, dated the 31st December, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 849 (E), dated the 31st December, 2004, except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said sub-section, namely:-
…
2 In respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services – Nil – 100%”
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