Legal appearance fees & reimbursement of expenses
This query is : Resolved
01 February 2012
I have two queries:
1. In the previous budget, under legal services, even appearance fees was brought under the ambit of service tax. But it is debatable and still judgement is awaited i guess. On that basis can we deffer the payment of service tax on appearance fee by an law firm.
2. For any consultancy services, if the consultant raise a separate debit note for reimbursement of expenses towards travel, hotel etc, is it still liable for service tax.
1. In the previous budget, under legal services, even appearance fees was brought under the ambit of service tax. But it is debatable and still judgement is awaited i guess. On that basis can we deffer the payment of service tax on appearance fee by an law firm.
2. For any consultancy services, if the consultant raise a separate debit note for reimbursement of expenses towards travel, hotel etc, is it still liable for service tax.
01 February 2012
Response to Point No 1
Legal services are now completely covered in budget 2011 and there is no ambiquity on the levy.
Earlier, only services received by business entity were covered. However, now
the scope of the service has been increased considerably by including services received by any person & services provided by arbitral tribunal. Further,
services provided by way of appearance before any Court, Tribunal or authority
are also included in the taxable service
Point No 2
Yes liable to service tax
Refer the clarification
Conditions for exclusion of out of pocket expenses or reimbursements from value
Service provider acts as PURE AGENT
Recipient of services
Receives & uses goods or services
Is liable to make payments to third parties
Is aware of the contractual arrangements
Invoice to indicate that payment is on behalf of the service recipient
No mark-up on recoveries from the recipient
Goods or services procured from third parties in addition to services provided by service provider on own account
Pure Agent
Pure agent means a person who
Enters into a contractual agreement with the recipient of service in the course of providing services
to act as his pure agent in order to incur expenditures or costs
Neither intends to hold nor holds any title to goods or services procured or provided as a pure agent of the recipient of services
does not use such goods or services and
receives only the actual amount incurred to procure such goods or services
In your case the consultant is not your agent, neither we can establish a relationship of an agent
Legal services are now completely covered in budget 2011 and there is no ambiquity on the levy.
Earlier, only services received by business entity were covered. However, now
the scope of the service has been increased considerably by including services received by any person & services provided by arbitral tribunal. Further,
services provided by way of appearance before any Court, Tribunal or authority
are also included in the taxable service
Point No 2
Yes liable to service tax
Refer the clarification
Conditions for exclusion of out of pocket expenses or reimbursements from value
Service provider acts as PURE AGENT
Recipient of services
Receives & uses goods or services
Is liable to make payments to third parties
Is aware of the contractual arrangements
Invoice to indicate that payment is on behalf of the service recipient
No mark-up on recoveries from the recipient
Goods or services procured from third parties in addition to services provided by service provider on own account
Pure Agent
Pure agent means a person who
Enters into a contractual agreement with the recipient of service in the course of providing services
to act as his pure agent in order to incur expenditures or costs
Neither intends to hold nor holds any title to goods or services procured or provided as a pure agent of the recipient of services
does not use such goods or services and
receives only the actual amount incurred to procure such goods or services
In your case the consultant is not your agent, neither we can establish a relationship of an agent
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