Seeks to amend Service Tax Rules, 1994 so as to specify the business entity as the person liable to service tax in respect of services provided by senior advocates.
Union Budget 2016-17, provided for service tax to be paid by Senior Advocates (as defined under Advocates Act) under forward charge w.e.f. 1st April 2016.
Now, Central Government vide Notification No. 32/2016 – ST dated June 6, 2016 has amended Mega Exemption Notification No. 25/2012 -ST to exempt services provided by a Senior Advocate by way of legal services to any person other than a business entity; or a business entity with a turnover up to Rs. 10 lacs in the preceding financial year.
Also, Notification No. 33/2016 – ST dated June 6, 2016 has amended Service Tax Rules, 1994 to provide that services provided by senior advocates would be covered under reverse charge mechanism. Also, if the senior advocate is engaged by another lawyer, the Service Tax is to be paid by the litigant under reverse charge.
Further, Notification No. 34/2016 – ST dated June 6, 2016 has amended Reverse Charge Notification No. 30/2012 – ST to provide 100% payment of tax by the recipient of the service provided by senior advocates.
In the nutshell, it has now been provided that services provided by senior advocate to a business entity with a turnover of more than Rs. 10 lacs are taxable under reverse charge mechanism and the whole of the tax is to be paid by the client who is litigating.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
Notification No. 33/2016-Service Tax,
Dated: June 6, 2016
G.S.R…..(E).In exercise of the powers conferred by sub-section (1) read with subsection (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:-
1. These rules may be called the Service Tax (Fourth Amendment) Rules, 2016.
2. In the Service Tax Rules, 1994, in rule 2, in sub-rule (1), in clause (d), in sub-clause(i),-
(a) in item (D), for sub-item (II), the following sub-item shall be substituted, namely:-
“(II) an individual advocate or a firm of advocates by way of legal services other than representational services by senior advocates;”
(b) after item (D), the following item shall be inserted, namely:-
“(DD) in relation to service provided or agreed to be provided by a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, and the senior advocate is providing such services, the recipient of such services, which is the business entity who is litigant, applicant, or petitioner, as the case may be”.
[F. No. B-1/7/2016-TRU]
Note:- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section-3, Sub-section (i) by notification No. 2/94-Service Tax, dated the 28th June, 1994 vide number G.S.R. 546 (E), dated the 28th June, 1994 and last amended vide notification No. 31/2016-Service Tax, dated the 26th May, 2016 vide number G.S.R. 554(E), dated the 26th May, 2016.