Clarification regarding leviability of Service Tax in respect of services provided by arbitral tribunal and members of such tribunal - Service Tax - TRADE NOTICE NO.-06/2016

आयुक्त का कार्यालय सीमा शुल्क , केन्द्रीय उत्पाद शुल्क एंव सेवाकर ११३ / ४ , संजय प्लेस , आगरा C. No. (30)02/Tech/Misc./2016 DATED: 21.06.2016 TRADE NOTICE NO.-06/2016 Subject: Clarification regarding leviability of Service Tax in respect of services provided by arbitral tribunal and members of such tribunal-reg. Attention of the Assesses/Trades are invited towards the following clarification regarding leviability of Service Tax in respect of services provided by arbitral tribunal and members of such tribunal: 2. There is some confusion regarding the legal position with respect to continuance of reverse charge mechanism for services provided by arbitral tribunals and individual arbitrators on the arbitral tribunal, with effect from 01.04.2016. 2.1. Services provided by an arbitral tribunal to (i) any person other than a business entity; or (ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year, are exempt from services tax (Entry 6(a) of Notification No. 25/2012-ST refers). Arbitral tribunal has been assigned the same meaning in the exemption Notification No. 25/2012-ST (paragraph 2(c)) as in clause (d) of Section 2 of the Arbitration and Conciliation Act 1996, which is as follows:- arbitral tribunal means a sole arbitrator or a panel of arbitrators 2.2 In the Budget 2016-17, the entry at O of Sl. No. 6 of Notification No. 25/2012-ST, has been omitted with effect from 01.04.2016. It read as: Services provided by a person represented on an arbitral tribunal to an arbitral tribunal . 3. The service provided or agreed to be provided by an arbitral tribunal to a business entity (turnover exceeding ₹ 10 lakh) located in the taxable territory, is taxable under reverse charge mechanism and recipient of service is liable to discharge service tax liability (Rule 2(d)(D)(l) of Service Tax Rules, 1994 and Notification No. 30/2012-ST (S'. No. 4) refer. There is no change in the Budget 2016-17 with respect to the said provisions. 4. Any reference in Service Tax law to an arbitral tribunal necessarily includes the natural persons on the arbitral tribunal, by virtue of clause (d) of Section 2 of the Arbitration and Conciliation Act, 1996. Services are provided or agreed to be provided by the panel of arbitrators, as comprising the several natural persons on the said panel, to the business entity or to the arbitration institution approached by the business entity for purpose of arbitration. The liability .to discharge Service Tax is on the service recipient, if it is a business entity located in the taxable territory with a turnover exceeding rupees ten lakh in the preceding financial year. 5. In view of the above, it is clarified that Service Tax liability for services provided by an arbitral tribunal (including the individual arbitrators of the tribunal) shall be on the service recipient if it is a business entity located in the taxable territory with a turnover exceeding rupees ten lakh in the preceding financial year. 6. All the Trade Associations/Chambers of commerce and the members of RAC are requested to bring this to the notice of their members/constituents. Sd/- (R. C. Sankhla) Commissioner