Service tax liability on reverse charge basis-legal fees

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Dhara Majithia (Querist)
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02 December 2013 If any legal advocate, charges any professional fees to business entity for providing legal consultancy, on which TDS u/s 194J has been deducted, then is business entity liable for service tax on reverse charge basis? Can he deny from liability stating that the fees were professional & not legal?

Nitin Bhuta

Nitin Bhuta (Expert)
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02 December 2013 No. Service Tax can be avoided only if such services are provided for personal use and not for the purpose of business or profession which can be substantiated with documentation even in a situation where TDS has been deducted u/s 194J of the Income Tax Act 1961 mistakenly.

Dhara Majithia

Dhara Majithia (Querist)
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03 December 2013 thank you..

Dhara Majithia

Dhara Majithia (Querist)
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03 December 2013 but what if the advocate is an employee of the company and monthly legal & professional fees are paid to him on which tds u/s 194J has been deducted?

Dhara Majithia

Dhara Majithia (Querist)
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03 December 2013 but what if the advocate is an employee of the company and monthly legal & professional fees are paid to him on which tds u/s 194J has been deducted?

Nitin Bhuta

Nitin Bhuta (Expert)
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03 December 2013 if he is employee then TDS should be deducted u/s 192B and not u/s 194J then service tax won't trigger because then relationship is that of employee and employer and not of principal to principal basis.

please adopt clear cut policy when you are complying with law sothat non compliance or improper compliance doesn't boomrang.

Dhara Majithia

Dhara Majithia (Querist)
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03 December 2013 thank u sir for replying.. sorry i wrongly used the word employee... the advocate sits in the same premises & appointed as a professional person who charges professional fees for legal consultancy monthly, not as a salaried person.. now please reply, is company liable on reverse charge basis?

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