Reverse charge under service tax in case of advoctes

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Querist : Anonymous

Querist : Anonymous (Querist)

31 August 2014 FREINDS ,IF A ADVOCATE OR FIRM OF ADVOCATES WHO IS NOT REGISTERED UNDER SERVICE TAX BECAUSE HE HAS PROVIDED SERVICES LESS THAN RS. 9L PROVIDES SERVICES TO A BUSINESS ENTITY WHOSE GROSS RECIPTS/ SALES TURNOVER IN PRECEEDING F.Y. IS MORE THAN RS. THEN IS THAT ENTITY REQUIRED TO GET REGISTER ITSELF UNDER SERVICE TAX AND PAY SERVICE TAX THEREON.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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01 September 2014 Yes tge business entity needs to apply for Service Tax registration in Form ST1 and pay service tax under Reverse Charge Mechanism.

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2014 BUSINESS ENTITY INCLUDES PROPRIETORSHIP AND PARTNERSHIP FIRM?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 September 2014 No. It does not include. See details from link given below--

https://www.simpletaxindia.net/2013/12/reverse-charge-mechanism-under-service.html

Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2014 But there written:-Business Entity” means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession ,so this includes firm or prop.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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22 July 2025 Here’s a detailed explanation about Reverse Charge Mechanism (RCM) on services received from Advocates or Firms of Advocates under Service Tax, based on the discussion you shared:

Scenario:
An advocate or firm of advocates, who is not registered under Service Tax (because their aggregate turnover is below ₹9 lakhs), provides legal services to a business entity.

The business entity has gross receipts or turnover exceeding the threshold limit for Service Tax registration.

The question is: Is the business entity required to register and pay service tax under Reverse Charge?

Key Points:
Applicability of RCM on legal services:

Legal services provided by an unregistered advocate or firm to a business entity attract service tax under Reverse Charge Mechanism (RCM).

Under RCM, the service recipient (business entity) is liable to pay service tax instead of the service provider.

Definition of Business Entity:

The definition is important because RCM applies only if the recipient is a business entity.

As per Section 2(f) of the Finance Act, 1994, business entity means any person ordinarily carrying out any activity relating to industry, commerce, or any other business or profession.

This definition includes proprietorships and partnership firms as well.

Registration Requirement:

The business entity must obtain Service Tax registration (if not already registered).

The business entity must pay service tax on the legal services received under RCM.

The business entity must also file service tax returns and can claim CENVAT credit, subject to applicable rules.

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