Legal services under Mega exemption notification :
Services provided BY –
(a) an arbitral tribunal to –
(i) any person other than a business entity; or
(ii) a business entity with a turnover up to Rs 10 lakh in the preceding financial year.
(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 Rs 10 lakh in the preceding financial year.
(c) a person represented on an arbitral tribunal to an arbitral tribunal are exempt from service tax.
ANALYSIS
Legal service means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.
Advocates can provide services either as individuals or as firms. Under this head, legal services provided by advocates or partnership firms of advocates are exempt from service tax when provided to the following:-
- an advocate or partnership firm of advocates providing legal services (Here the services are being provided to the same class of persons)
- any person other than a business entity
- a business entity with a turnover up to Rs 10,00,000 in the preceding financial year
However, in respect of services provided to business entities, wi th a turnover exceeding Rs 10 lakh in the preceding financial year, tax is required to be paid on reverse charge by the business entities. Business entity is defined in section 65B of the Finance Act, 1994 as ‘any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession‘. Thus, it includes sole proprietors as well. The business entity can, however, take input tax credit of such tax paid in terms of the CENVAT Credit Rules, 2004, if otherwise eligible. The provisions relating to arbitral tribunal are also on similar lines.
| 1. Arbitral tribunal means a sole arbitrator or a panel of arbitrators.
2. Advocate means an advocate entered in any roll under the provisions of the Advocates Act, 1961. |