Prashanth Sreedhar Shenoi Vs ASSISTANT COMMISSIONER OF
CENTRAL TAX (Karnataka High Court)
Introduction: The Karnataka High Court recently ruled on the imposition of service tax for legal services provided by advocates and senior advocates under the reverse charge mechanism (RCM). This landmark judgment sheds light on exemptions, liability, and the legal obligations of service recipients.
The Hon’ble Karnataka High Court in the case of Prashanth Sreedhar Shenoi v. Assistant Commissioner (Central Tax) Bangalore [Writ Petition No. 26096/2022 dated April 22, 2024] allowed the writ petition and held that, the services of legal professionals consisting of partnership firm of Advocates or an individual Advocate other than a Senior Advocate is exempt from levy of service tax to an advocate or partnership firm of advocates providing legal services to any person other than a business entity or a business entity with a turnover upto ten lakh rupees in the preceding financial year. Also, even when the individual advocate or partnership firm of advocate or senior advocate does not fall within the purview of the exemption notification, the service recipient is liable to pay service tax on the aforesaid services on reverse charge basis.
Facts:
Mr. Prashanth Sreedhar Shenoi (“the Petitioner”) and other related Petitioners are practicing Advocates and have questioned the veracity of the show cause notice, order-in-original and recovery notice issued by the Revenue Department (“the Respondent”) by way of filing the writ petition before the Hon’ble High Court praying for setting aside the Impugned Order and quashing the proceedings initiated by the Respondent as per the Impugned Order.
