service tax by senior advocates, Service Tax

[vikral choudhary]

Sir,

As senior advocates is hired through another advocate and there is no direct contract between senior advocates and client which is a business entity. Hence tax would be paid on the fee charge by senior advocate under forward charge, on the same transaction it would be paid by client under reverse charge on the services rendered by advocate as the same would be included. So, there will be double taxation on the same transaction. Please Clarify the same? and as a student i want your guidance on the point 'how it can be avoided'.

Thanks

Posts / Replies

[Ganeshan Kalyani]

Sir, a company engages an Advocate who in turn appoints an senior advocate for the purpose of seeking advice for completion of his assignment. Here service tax will be paid by company on the legal consultancy service charged by an Advocate. No service tax will be paid by senior advocate. Thanks.

[vikral choudhary]

thanks sir for your reply,but sir what is ongoing controversy where the question of 'Double taxation' is raised in various courts on the forward charge mechanism applicability on senior advocates.

[Ganeshan Kalyani]

Sir, I am interested to know about the same. Can you hint us on the subject you are referring.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Sh.Chaudhary has not understood the concept of 'RCM' and 'Forward Charge'. That is why he is talking about double taxation. Conditions of applicability of RCM has to be understood by him.

[Akash Deep]

Dear Vikral,

It appears that you are not aware of Notification No.32/2016, 33/2016 and 34/2016 all dated 6.6.2016. the combined effect of ll three notifications can be deduced asunder:

Services provided by a Senior Advocate were liable to service tax under forward charge w.e.f 1^st April, 2016. In this regard, the government has issued notifications to make services provided by Senior Advocate liable to service tax under Reverse Charge Mechanism i.e. the recipient has been made liable to pay the tax and not the Senior Advocate. In respect of the services provided by a Senior Advocate, the following notifications have been issued:-

1. Service tax Rules, 1994 have been amended whereby the recipient of services has been made liable to pay service tax in case of representational services provided by a Senior Advocate. It has been clarified that where the a Senior Advocate is engaged by an individual advocate or a law firm for appearance before a Court, Tribunal etc. for any business entity, the business entity would be liable to pay service tax in respect of the Senior Counsel’s fee.
2. The amendment further provides that in case of legal services (other than representational services) provided by a Senior Advocate i.e. legal opinions, conferences, other consultancy services the recipient of services would be liable to pay service tax in respect of the fee charged by the said Senior Advocate. However, there is no clarity if the recipient services in this case would be the client or the advocate or law firm engaging the said Senior Advocate. Thus, if the legal opinion is addressed to the law firm or the invoice in respect of the said opinion is addressed to the law firm, then the Department may take a view that the law firm engaging the said Senior Advocate is liable to pay service tax on reverse charge basis.

It would, therefore, be advisable in cases where a law firm engages a Senior Counsel for services, other than representational services, the Senior be requested to raise the invoice directly on the client. In such a case, the client would be liable to pay service tax.

3. Exemption from service tax has been provided in respect of legal services (both representational and advisory services) provided by a Senior Advocate to an individual litigant or a business entity having turnover of less than ₹ 10 lakhs in the preceding financial year, from service tax.

Hope this clarifies

[Ganeshan Kalyani]

Sir, welcome Sri Akash Ji, hope you are doing fine. Thanks for your participation. Thanks.