Mega Offer Avail 65% Off in CA IPCC and 50% Off in all CA CS CMA subjects.Coupon- IPCEXAM65 & EXAM50. Call: 088803-20003

CA Final Online Classes
CA Classes

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Partial reverse charge in the case of firms

Jatin Srivastava 
on 04 August 2014

LinkedIn


Partial reverse charge mechanism on manpower supply if service receiver is a firm

As per the provisions of reverse charge mechanism on manpower supply it is applicable only in the cases, where the service receiver is a body corporate.

The word body corporate defined by rule 2(bc) of service tax rules 1994 is as follows

Body corporate has the meaning assigned to it in clause (7) of section 2of the companies act 1956.

Meaning of Body corporate as per the co. act

According to Section 2(7) of Companies Act, 1956 defines Body Corporate as "bodycorporate" or "corporation" includes a company incorporated outside India but does not include –

(a) a corporation sole;

(b) a co-operative society registered under any law relating to co-operative societies; and

(c) Any other body corporate (not being a company defined under this Act), which the Central Government may, by notification in the Official Gazette, specify in this behalf.

Let us have some points on the basis of which we can understand that Body corporate doesn’t includes partnership firm.

1. The Companies Act has used the word Corporate as synonym to the word Body Corporate.

The ordinary meaning of Corporation as per Oxford Law & Business Electronic Dictionary:

Corporation, an entity that has legal personality, i.e. it is capable of enjoying and being subject to legal rights and duties.

Under Halsbury’s law of England: A Corporation may be defined as a body of persons which  is recognized by the law as having a personality which is distinct from the separate personalities of the members of the body.

We can say that  body corporate or corporation is a legal entity distinct from the members with perpetual succession.

As per legal dictionary (The Law Lexicon), a firm is not a legal entity and is a collective term for partners who have entered into partnership with one another.

As per the partnership act 1932 Partners don’t have separate legal entity from the firm but from the above analysis we can understand that body corporates have separate legal entity ,hence a firm can’t be called as body corporate.

Also we can see in the various sections of co.act the word body corporate and firm has been used separately.

Section 299(3)(a), 299(1), 295 and so on.

Hence it is quite clear from the above analysis that a partnership firm is not a body corporate, so a firm receiving service of manpower supply need not to pay service tax under partial reverse charge mechanism.


Tags :



Category Service Tax
Other Articles by -
Jatin Srivastava 

Report Abuse

LinkedIn



Comments


update

X

Do you have any Tax Queries

Submit