Seeks to amend notification No. 30/2012-Service Tax dated 20th June, 2012, so as to prescribe extent of payment of service tax by a business entity as a recipient 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. 34/2016-Service Tax
Dated: June 6, 2016
G.S.R…..(E).In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 30/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20thJune, 2012, namely:-
1. In the said notification,-
(a) in paragraph I, in clause (A),-
(i) in sub-clause (iv), for item (B), the following item shall be substituted, namely:-
“(B) an individual advocate or a firm of advocates by way of legal services other than representational services by senior advocates, or”;
(ii) for sub-clause (iva), the following sub-clauses shall be substituted, namely:-
“(iva) 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, to such business entity who is litigant, applicant, or petitioner, as the case may be”;
(ivb) provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate;”
(b) in paragraph (II):-
(i) in the TABLE, against Sl. No. 5, for the entry under column (2), the following entry shall be substituted, namely:-
“in respect of services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly”;
(ii) after Explanation II., the following shall be inserted, namely:-
“Explanation III. – The business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be treated as the person who receives the legal services for the purpose of this notification.”.
Note:- The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 30/2012 – Service Tax, dated the 20th June, 2012, vide number G.S.R. 472 (E), dated the 20th June, 2012 and last amended vide notification No. 18/2016-Service Tax, dated the 1st March, 2016 vide number G.S.R. 266, dated the 1st March, 2016.