Service Tax liability under Reverse Charge Mechanism for Advocate Service

[Mehul Pandya]

Greetings

In case of Services Provided by Advocate, (As per Notification No. 25/2012 dated 20-06-2012 serial No.6 (B)(iii), there is mentioned that a business entity with a turnover up to rupees ten lakhs in the preceding financial year;) In that context my query is that in case of Manufacturing partnership firm having turnover say 15 lakhs from the Salt or any other trading activity. He is not service provider. In this case if he receives service from the advocate, will he liable to pay service tax ?? Pl. guide us for this issue..

[Rajagopalan Ranganathan]

Sir,

As per Sl. No. 6 (b) (iii) of Notification No. 25/2012=ST dated 20.6.2012 (effective from 1.7.2012) as amended service provided by an individual advocate or a firm of advocate to a business entity whose turnover is up to rupees ten lakh in the preceding financial year is exempted from payment of service tax. If the turnover of the business entity is more than 10 lakhs during preceding financial year then service tax is to be paid by the service receiver under RCM.

[Ganeshan Kalyani]

Pl note if advocate or firm of advocate provide services to a body corporate I.e company then the company has to service tax under reverse charge mechanism.

[Mehul Pandya]

Thank you for your Reply.

Please elaborate the meaning of "Turnover" here., Turnover as in Sales/ Trading Activity or Service provided.?

Thank you.

[Rajagopalan Ranganathan]

Siir,

Turnover means service turnover.

[Mehul Pandya]

Sir,

Auditor calculating all over turn over including trading turnover, how we can clarify that

[Dr. Sanjiv Agarwal]

Turnover is not defined. It means total turnover. Not only service turnover. We can take reference to company law / income tax .

Turnover for the purpose of Not. 25/2012 shall be Total turnover of the assessee including both goods and services

[Dr. Sanjiv Agarwal]

Yes, Alok Agarwal is right

[A J DEORA & ASSOCIATES]

The words are " business entity with a turnover up to rupees ten lakhs in the preceding financial year" -very clear is the entity turnover -from all sources.

-Ashok Deora

AI Summary

Reverse charge for advocate services applies where a business exceeds the prescribed turnover threshold; turnover includes all receipts.
Reverse charge applies to advocate services received by a business entity whose preceding-year turnover exceeds the exemption threshold; a body corporate is liable under reverse charge regardless. "Turnover" is to be read as the entity's total turnover from all sources (goods and services), not merely service turnover, for determining availability of the exemption.