The high court bench comprising acting chief justice Ashok C Agarwal and justice AP Shah admitted a writ petition filed by the Federation of All India Tax Practitioners, the Chamber of Income Tax Consultants and Mid-town Study Circle of Chartered Accountants, and granted interim relief from the imposition of the service tax.

The stay order has come as a big relief for chartered accountants, who had been opposing the imposition of service. "We are delighted that the Mumbai high court has stayed the service tax on chartered accountants," said chartered accountant Sailesh Haribhakti.

CA firms have been facing stiff resistance from clients to shoulder the additional five per cent service-tax burden in a recession-hit year.

"The way our work is structured, imposition of service tax would increase paper-work manifold," said achartered accountant.

The service tax has been a controversial imposition since its very inception, and chartered accountants are only one of the professional categories to have protested its imposition. Advertising agencies and transport operators have also expressed strong opinions against the imposition of service tax.

Chartered accountants have said, for example, that the revenue earned by the state through the measure is so marginal that it can be collected through some other means. One of the problems with the imposition of such a tax is also that it is often difficult to calculate the exact gross amount on which the tax is to be leviable. While for chartered accountants this is not a problem (it is charged on their audit fees) for advertising agencies which deal only in gross billings this is an extremely major problem.