Definition of Body Corporate/Business corporate

[krishna murthy]

As per Notification 30/2012 dtd. 20.06.2012, reciever of service is requuired to pay service tax at prescribed percentage when certain services like manpower supply, security service, works contract, rent-a-cab etc. is provided by a proprietorship/ partner ship / society to a business entity registered as body corporate. Further difinition of body corporate is taken from section 7 of the companies Act, 1956 as amended. As per Section 7 of the companies Act A body Corporate ' includes a copany registered outside India but does not include a proprietorship, Co-operative society, Corporate sole and any other company ( other than those registered under Compnies act,).

Here the moot question arises whether a partnership firm or LLP gets covered under the definiton of Body corporate as the definition does not mention term 'Firm' anywhere in the definition. There are different views on this issue. Some of the partnership assesees are even discharging service tax under reverse charge. can this confusion be cleared at the earliest as this will have a huge revenue implication.

Krishnamurthy .M.S.

supdt. service Tax, Bengaluru.

[Mahir S]

Sir,

For instance, First proviso to Rule 6(1) of service tax rules, 1994 states that partnership firm is also required to pay tax quarterly. The rule does not specify whether the partnership is a partnership with limited liability or unlimited liability. Hence, it therefore means that rule is applicable to all types of partnerships including partnership firms and also irrespective of whether the partnership is a partnership with limited liability or unlimited liability. It also indirectly means that such partnership firms are not body corporate.

LLP, though incorporated, but basic nature of LLP is partnership firm and therefore, in my view this benefit is available to LLP also.

Thus, all partnership firms and also with limited/unlimited liability are governed by the provisions of Partnership Act, 1932.

 

[Ramanujam Varadarajan]

Notification 30/2012 or other provisions of Service tax refers independently Partnership firm and Body corporate. Wherever partnership firm is also covered, it is specified in addition to the term Body corporate. Thus, term Body Corporate as per Service tax provisions does not include Partnership form or LLP (which is similar to Partnership firm)

[Priyesh Agrawal]

Refer to Definition of Partnership in Rule 2 of Service Tax Rules, 1994 -

“partnership firm” includes a limited liability partnership

Since for the purpose of Service Tax LLP is considered as Partnership Firm the same shall not be considered as Body Corporate for the purpose of Joint Charge under Notification 30/2012 dated 20/06/2012.

[krishna murthy]

Thanks for you all interaction. But the answer is not fully clear from doubts. Look, the definition of "body corporate" given under companies Act clearly excludes a firm. It speaks of corporate sole,co-operative society, any other body corporate. there is view that since the definiton specifically does not mention "firm' in the eclusion clause of the definiton, the partnership firm gets covered under the definition " body corporate". Please relook the issue. Thanks for participation.

[Jai Verma]

Dear Sir,

we are an partnership firm and registered with service tax under GTA as well as we are taking manpower services from the contractor.....now wish to know that the new notification no. 30/2012 in respect of service tax payable by service receiver on full reverse charges it may be applicable on us ? and the term of body corporate is the not specified for the partnership firm.

my question is incl. above that can we treat our unit as body corporate for service tax pupose.

Pl advise !

AI Summary

Definition of body corporate: partnership firms and LLPs excluded, so reverse-charge service-tax duties do not automatically apply to them. The core issue is whether partnership firms or LLPs fall within the statutory meaning of body corporate for reverse-charge service tax obligations. Company-law based definitions of body corporate exclude partnership firms, and service tax provisions separately reference partnership firms where intended. For procedural purposes, service tax rules treat LLPs as partnership firms, so LLPs are governed as partnerships rather than as bodies corporate. Consequently, reverse-charge obligations targeting bodies corporate do not automatically apply to partnership firms or LLPs unless expressly included.