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Negative Blues III - Service Tax applicability on Advocates, CAs from July 1, 2012

JUNE 15, 2012

By G Natarajan, Advocate, Swamy Associates

WITH the introduction of negative list based levy of service tax with effect from 01.07.2012, the service tax applicability for advocates, Chartered Accountants, etc. are tabulated below.

S.No

Service Provider

Service Recipient

Applicability of levy

Remarks

1

Individual advocate

Other than Business entity

Service Tax exempted vide S.No. 6 of Notification 12/2012

Business entity is defined in Section 65B (17) as “any person ordinarily carrying out any activity relating to industry, commerce or any other business”. As per this definition, an individual shopkeeper would also be a business entity. If he engages an individual advocate in connection with his business entity, the exemption will not apply. If he engages an individual advocate not in connection with his business, then the exemption can be claimed.

2

Individual Advocate

Business entity

Service tax is payable. As per S.No. 5 of Notification 15/2012 service tax is payable by the business entity receiving the service

Refer to the definition of “business entity” as above.

3

Firm of advocates

Individual / Business entity

Service tax is payable by the service provider

Exemption is available only for services provided by an “individual advocate” to any person other than a business entity. Reverse charge is also not applicable here.

4

Legal services provided by persons other than “advocates”. Eg. Tax Consultants / CAs, etc.

Individual / Business entity

Service tax is payable by the service provider.

The exemption is only when the service is provided by an individual “advocate”. Even the reverse charge is applicable only when the service is provided by individual “advocate”. The term “advocate” is also defined with reference to the Advocates Act.

(The author is a Chennai-based Advocate)


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: business entity definition includes 'profession'

Sir

I wish to add the following:

a) The revised definition in sub section 17 of Section 65B includes 'profession'. The said definition is
'business entity' means "any person ordinarilly carrying out any activity relating to industry, commerce or any other business or profession"

b)'the activity of providing legal service as an advocate is considered as profession'.

c) If an individual advocate avails services of another individual advocate, then the individual advocate who receives the service is liable to pay service tax under reverse charge mechanism since he is coming under the defintion of 'business entity.

Regards
S. Gokarnesan
advocate
Chennai

Posted by
 

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