Kapadia, J. - (1.) This is an appeal filed by All India Federation of Tax Practitioners against the Division Bench judgment of the Bombay High Court dated 22.2.2001 in Writ Petition No. 142/99 upholding the legislative competence of Parliament to levy service tax vide Finance Act, 1994 and Finance Act, 1998. According to the impugned judgment, service tax falls in Entry 97, List I of the Seventh Schedule to the Constitution.
(2.) The question which arises for determination in this civil appeal concerns the constitutional status of the levy of service tax and the legislative competence of Parliament to impose service tax under Article 246(1) read with Entry 97 of List I of the Seventh Schedule to the Constitution. The issue arising in this appeal questions the competence of Parliament to levy service tax on practising chartered accountants and architects having regard to Entry 60, List II of the Seventh Schedule to the Constitution and Article 276 of the Constitution. Background Facts
(3.) On 1.6.1998 Finance Bill, 1998 was introduced in Parliament. Clause 119 of the Notes sought to substitute Sections 65, 66 and 68 and amend Section 67 of the Finance Act, 1994 relating to service tax so as to levy a tax on services rendered by a practising chartered accountant, cost accountant and architect to a client in professional capacity at the rate of five per cent of the amount charged to the client. On 3.6.1998, Bombay Chartered Accountants Association made a representation to the Central Government objecting to the aforestated Bill. On 1.8.1998 the Finance Bill was however passed and the Finance (No. 2) Act, 1998 received the assent of the President of India. The Act came into force with effect from 1.4.1998. On 7.10.1998, Union of India issued Notification No. 57/98 inter alia exempting taxable services other than accounting and auditing. On 16.10.1998, Union of India issued another Notification No. 59/98 inter alia reducing the scope of the exemption. On 20.1.1999, Writ Petition No. 142/99 was filed by the Federation in the Bombay High Court challenging the validity of the levy of service tax. By the impugned judgment dated 22.2.2001 the Bombay High Court rejected the writ petition and upheld the legislative competence of Parliament to levy service tax. Reason for Imposition of Service Tax;