• Accounting Codes

Such codes are no longer statutory but used for statistical purpose for the purpose of registration and for payment of tax as specified vide Circular No.165/16/2012 –ST dated 20.11.2012:

Tax Collection of Service Interest and penalties on such service
00440480 00440483

  • Taxability as settled by precedents / Circulars / Trade notices

Activity Whether falls within the scope of present service Reference
Services by individual to another individual No Relevant extracts of Letter No. D.O.F. 334/3/2011-TRU, dated 28-2-2011

  • Value of Taxable Service

Section 67 read along with Service Tax (Determination of Value) Rules, 2006 provides the manner of determining the value of taxable services on which services tax should be levied.

In respect of Legal Consultancy Services, no specific provision for determination of taxable value has been provided.  However it has been clarified that the value of taxable services is the total amount of consideration consisting of all components of the taxable service and it is immaterial that the details of individual components of the total consideration are indicated separately in the invoice. Thus, the value of taxable Legal Consultancy Services is to be determined in terms of provision of Section 67 read with the prescribed Rules.

  • Abatement

No abatement has been granted to any person liable to pay service tax under the Section.

  • Exemptions available

  1. General Exemption
  • Small Service Provider

Vide Notification No 33/2012-ST, dated 20.06.2012 – Exemption to Small service providers having taxable turnover of less than 10 Lakhs and providing services other than by way of under a brand name.

  • Import of Technology

Vide Notification No. 14/ 2012-ST, dated March 17, 2012 – Exemption in respect of Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of R&D Cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986. 

  • To Foreign Diplomatic missions and their personnel

Vide Notification No 27/2012-ST, dated 20.06.2012 – Exemption for all the taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein.

  • Services by TBI or STEP

Vide Notification No 32/2012-ST, dated 20.06.2012 – All taxable services provided by TBI or STEP have been exempted

  • Services provided to SEZ

Vide Notification No 40/2012-ST, dated 20.06.2012, all taxable services received by a Unit located in a Special Economic Zone (SEZ) or Developer of SEZ for the authorized operations, has been exempted from the levy of whole of the service tax.

  1. Specific Exemptions:

Notificaiton No. 25/2012-ST provides the following exemption to Services provided by-

 (b) an individual as an advocate or a partnership firm of advocates by way of legal services to,-

(i)    an advocate or partnership firm of advocates providing legal services ;

(ii)   any person other than a business entity; or

(iii)  a business entity with a turnover up to rupees ten lakh in the preceding financial year; or

The above position is explained as under:

Legal Service provided by

 

Individual or a partnership firm of advocates Any other entity
To an individual advocate or a partnership firm of advocates providing legal services Exempt Taxable
To a Business entity with turnover more than 10 Lakhs Taxable Taxable
To a Business entity with turnover more than 10 Lakhs Exempt Taxable
To any other person Exempt Taxable

However, w.e.f. 01-04-2016, the said clause has been substituted and the new clause reads as under:

  1. b) a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services to-—

(i)    an advocate or partnership firm of advocates providing legal services ;

(ii)   any person other than a business entity; or

(iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or

Further, clause (c) has been inserted w.e.f. 01-04-2016 to provide exemption in respect of following services:

(c)   a senior advocate by way of legal services to a person other than a person ordinarily carrying out any activity relating to industry, commerce or any other business or profession;

  • Provisions relating to point of taxation

As per Rule 3 of Point of Taxation Rules, 2011, the point of taxation shall be-

  • Time when the invoice for the service provided or to be provided is issued. As per Rule 4A of Service Tax Rules, invoice shall be issued within 30 days from the date of completion of service. In case invoice is not issued within 30 days from the completion of service, the point of taxation shall be the date of completion of service.
  • In case where the person providing the service receives payment before the time specified above, the date of receipt of payment shall be the point of taxation.

  • Provisions relating to Place of Provision of Service Rules, 2012

The Place of Provision of Service Rules, 2012 contains different rules for different nature of services. Since no specific Rule applied to such services, the place of provision shall fall under Rule 3 which provides that location of service recipient shall determine place of provision of such services.  Thus, if the recipient is within taxable territory, place of provision shall be within taxable territory and taxable, else, non taxable.

  • Provisions relating to reverse charge

These services are not included under the mechanism of Reverse Charge. Hence, the person providing the service shall be the person liable to pay service tax.

  • Related Circulars and Notification

  • Relevant extracts of letter no. D.O.F. 334/13/2009-TRU, dated 6-7-2009
  • Relevant extracts of letter no. D.O.F. 334/3/2011-TRU, dated 28-2-2011
  • Relevant Extracts of letter No. D.O.F. 334/13/2009-TRU, dated 6-7-2009

2.3 Legal Consultancy Service:As in the case of management consultancy or engineering consultancy service, any consultancy, advice or technical assistance provided in any discipline of law is proposed to be subjected to service tax. However, the tax would be limited to services provided by a business entity to another business entity. It has been defined that a business entity includes firms, associates, enterprises, companies etc. but does not include an individual. Thus, services provided by an individual advocate either to an individual or even to a business entity would be outside the scope of the taxable service. Similarly, the services provided by a corporate legal firm to an individual would also be outside the purview of taxable service. Any service of appearance before any court of law or any statutory authority would also be kept outside this levy.

  • Relevant extracts of Letter No. D.O.F. 334/3/2011-TRU, dated 28-2-2011

3.6  Services by legal professionals [Section 65(105)(zzzzm)]

The scope of the existing service is being expanded to include:

(i)    Services of advice, consultancy or assistance provided by a business entity to individuals as well;

(ii)   Representational services provided by any person to a business entity; and

(iii) Services provided by arbitrators to business entities.

Services provided by individuals to other individual will remain outside the levy.

 

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