The Bombay High Court has ruled that service tax cannot be levied on an individual advocate for legal services rendered to a partnership firm of advocates, holding that such services are expressly exempt under statutory notifications issued under the Finance Act, 1994. The Court quashed the service tax demand, recovery notice, and the underlying show cause notice, concluding that the tax authorities had acted without jurisdiction.
The Bench of Justice G.S. Kulkarni and Justice Aarti Sathe noted that the issue was squarely covered by its earlier decision in Advocate Pooja Patil v. Deputy Commissioner, CGST & CX, where identical notifications were interpreted. In that case, the Court had held that service tax was not leviable on individual advocates for legal services rendered to a firm of advocates and that any contrary action by the department would be without jurisdiction.
The petitioner has been enrolled as an advocate with the Bar Council of Maharashtra and Goa since 2007. In October 2021, the Service Tax Department issued a show cause notice alleging a mismatch between the petitioner’s Income Tax returns, TDS data and Service Tax returns for the financial year 2016–17. Based on third-party data verification, the department alleged evasion of service tax amounting to ₹26.81 lakh.
However, the show cause notice and subsequent notices fixing personal hearings were sent to the petitioner’s old address, resulting in non-service. In the absence of a reply, the adjudicating authority passed an ex parte Order-in-Original in March 2023 confirming the demand along with interest and penalty.
More than two years later, in October 2025, the department initiated coercive recovery proceedings, issuing a recovery notice under Section 87 of the Finance Act, 1994 and creating liens on the petitioner’s bank accounts. The petitioner became aware of the proceedings only after bank accounts were frozen, prompting her to approach the High Court.
The principal issue before the Court was whether service tax was leviable on legal services provided by an individual advocate to a partnership firm of advocates during the pre-GST regime.
The petitioner relied on notification No. 25/2012-ST, which grants a complete exemption to legal services provided by an individual advocate or a partnership firm of advocates to another advocate or firm of advocates; and Notification No. 30/2012-ST, which, in any event, places the tax liability under the reverse charge mechanism, making the service recipient liable and not the advocate.
It was also argued that the proceedings were vitiated due to violation of principles of natural justice, as the petitioner was denied a reasonable opportunity of hearing.
Relying on the same reasoning, the Court observed that the statutory notifications were clear and binding, and the designated officer could not ignore them while confirming the demand. The Court held that the very foundation of the proceedings was illegal, rendering the demand unsustainable.
The Bench further observed that remanding the matter back to the adjudicating authority would serve no purpose, as the levy itself was barred by law.
Allowing the writ petition, the Bombay High Court quashed the Order-in-Original dated 15 March 2023 imposing service tax, interest and penalty; Set aside the recovery notice dated 31 October 2025 and all consequential actions, including bank account attachments; and Quashed the original show cause notice dated 27 October 2021.
Case Details
Case Title: Manisha Rajiv Shroff Versus UOI
Case No.: Writ Petition (L)No. 1684 Of 2026
Date: 05/02/2026
Counsel For Petitioner: Mihir Gupte
Counsel For Respondent: Shruti Vyas
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