The Allahabad High Court recently made a significant ruling regarding the taxation of lawyers’ chambers and offices for electricity consumption. The Court asserted that since lawyers are not engaged in trade, business, or any commercial activity, their chambers should only be taxed under the Domestic category.
A bench comprising of Justices Surya Prakash Kesarwani and Anish Kumar Gupta emphasized that a court-appointed attorney is prohibited from participating in business or commercial activities. Additionally, the Court highlighted the Bar Council of India’s regulations against advertising legal services, further establishing the distinctive nature of the legal profession compared to commerce.
The Court clarified that the legal profession is not eligible for taxation under the commercial category, which applies to commercial activities. It cited previous decisions from the Supreme Court and various High Courts supporting this stance. Consequently, the Court ruled that the Lawyers Chambers/Offices should only be charged under the Domestic category (LMV-1) since lawyers do not conduct business or engage in commercial activity.
This ruling came about when the Court heard an appeal by the Uttar Pradesh Tehsil Bar Association, challenging the application of commercial electricity consumption rates to attorney offices. The petitioners argued that the practice of law is not a commercial enterprise and that lawyers play a vital role in society by contributing to the administration of justice.
The Uttar Pradesh Power Corporation contended that attorney activities fell under “non-domestic purposes” and should be charged at the LMV-2 rate for electricity consumption. However, the Court pointed out that the rate schedule for the fiscal year 2022-23 did not list advocate activities under any category. To impose LMV-2 rates, it would have to be established that the nature of their work aligns with the examples provided in that category.
The Court referred to the Supreme Court’s decision in M.P. Electricity Board and Others v. Shiv Narain Chopra, affirming the non-commercial nature of the legal profession. Relying on this precedent, the Court granted the petition, ruling that earlier circulars imposing LMV-1 rates should apply to attorneys’ chambers on court grounds.
