Under this prima facie view , three implications evolve as below :

a. Non levy of Commercial electricty charges

b. Non Levy of service tax on advocates under reverse charge mechanism

c. Non levy of property tax on Advocates Office as Commercial Establishment

Three decisions of Apex court under different perspective and enactments are discussed as under :

Commercial Electricity Charges

In the matter of Chairman, M.P. Electricity Board and Ors. Versus Shiv Narayan and Anr. the division bench of SC,comprising Arijit Pasayat & H.K. Sema, JJ , held that

.running of an office by an Advocate in a building cannot be termed as Commercial activity .Accordingly ,electricity rates fixed for Commercial user cannot be charged .

The Apex court while dealing with the term “commercial” further held that

Even if it is accepted that the user was not domestic, it may be non- domestic. But it does not automatically become commercial.. The words non- domestic and commercial are not inter-changeable. The entry is commercial. It is not a residual entry, unless the user is commercial the rate applicable to be commercial user cannot be charged merely because it is not considered to be domestic user, as has been held in New Delhi Municipal Corporation case (supra).

With the aforesaid finding, the division bench had referred the matter to the larger bench . However, subsequently it was decided by Larger Bench on other issue without going into the fact as to whether the legal professional activity is commerical or otherwise ( For entire order , pl referhttp://bit.ly/1O7p6bs)

Levy of Service Tax on Advocate

It is pertinent to note that  apex Court has recently also stayed the levy of Service tax on advocates .

SC bench comprising Chief Justice H.L. Dattu, Justice A.K. Mishra and Justice Amitava Roy has stayed the Bombay High Court’s order ,dated 15.12.2014 , of dismissing the petition challenging levy of service tax on lawyers.

The Bombay Bar Association has challenged aforesaid order as well as the provision of Sub-clause (zzzzm) of clause (105) to Section 65 of the Finance Act, 1994, which was inserted by the Finance Act, 2011.

Few of the prominent questions of law, amongst others, as framed before SC areas below :

Whether the relationship between an advocate and a litigant is that of a provider and a service recipient or whether the relationship is that of a representative and a litigant ?

Whether the impugned judgment is correct and legal in as much as levy of service tax on the provision of assistance to the court would hit the provision of justice either by the individual or a business entity as both are indisputably guaranteed under right to justice in terms of Article 21 read with Article 39A of the Constitution ?

This issue is also pending for the final disposal .


c) levy of property tax on Advocates Office as Commercial Establishment

The Apex Court had to deal with an issue as to whether a firm of lawyers is a commercial establishment or otherwise

Supreme Court in V. Sasidharan v. M/s. Peter and Karunakar and others AIR 1984 SC 1700 wherein it has been held that a firm of lawyers is not a ‘commercial establishment’. Relevant portion of the said judgment is reproduced as under:-

10. Learned counsel for the appellant argues that a lawyer’s office is a commercial establishment because, persons who are employed in that office are mainly engaged in office work. This argument overlooks that, under the second clause of the definition inSection 2(4), commercial establishment’ means an establishment or administrative service in which the persons employed are mainly engaged in office work. Partly, we go back to the same question as to whether a lawyer’s office is an establishment’ within the meaning of the Act. The other aspect which this argument fails to take note of is that a lawyer’s office is not an administrative service’. It seems to us doing violence to the language of the second clause of Section 2(4) to hold that a lawyer’s office is an administrative service’. This argument has therefore to be rejected.

xxx xxx xxx

12. For these reasons, we are of the opinion that the office of a lawyer or of a firm of lawyers is not a commercial establishment’ within the meaning of the Act. This conclusion is strengthened by the other provisions of the Act…….If the current trends are any indication and if old memories fail not, the earnings of lawyers’ clerks cannot, in reality, bear reasonable comparison with the earnings of employees of commercial establishments, properly so called. They, undoubtedly, work hard but they do not go without their reward. They come early in the morning and go late at night, but that is implicit in the very nature of the duties which they are required to perform and the time they spend is not a profitless pastime.

xxx xxx xxx

15. ………We agree with their reasoning and hold that the office of a lawyer or of a firm of lawyers is not a commercial establishment’ within the meaning of Section 2(4) of the Act.‖

Conclusion :

In lieu of the aforesaid three decisions , what is apparent is that Legal profession is not a “commercial activity” or “service” .

With the same prima facie view , it would be safe to presume that the final verdict in these two matters may be leading to the “eradication of comercial rates of electricity on advocates” , “non levy of service tax on advocates” as well as non levy of property tax on advocates office as commercial establishment.