Applicability of Reverse Charge on LLP

[Greeshma Vp]

My query is whether a Limited Liability partnership is included in the term "Body corporate" for the purpose of Reverse Charge mechanism for services like Manpower supply and works contract.

I have seen various different opinions expressed on this topic, some stating that LLP is included in definition of "firm" and hence is not a body corporate. While there are some other views stating the definition of body corporate make no reference to definition of firm and hence LLP is not excluded from term body corporate.

Please share your opinion on this.

[Rajagopalan Ranganathan]

Sir,

Notification No. 30/2012-ST dated 20.6.2012 (effective from 1.7.2012) prescribes those entities who have to pay service tax on reverse charge mechanism. In para 1 A (ii) (f) it is stated that taxable services provided or agreed to be provided by any partnership firm whether registered or not under any law including association of persons. In my opinion LLP is also a partnership firm and hence it is liable to discharge service tax on by reverse charge mechanism.

[Greeshma Vp]

Sir,

The reference you have made is true for GTA service. But the position on partial reverse charge services like Works contract and Rent a cab is still not clear.

[Rajagopalan Ranganathan]

Sir,

As per Section 2 (d) of the Limited Liability Partnership Act, 2008 'body corporate' means a company as defined in Section 3 of Company's Act, 1956 and includes (i) a limited liability partnership registered under this Act, (ii) a limited liability partnership incorporated outside India and a company incorporated outside India. In view of the above LLP is a body corporate

[Ganeshan Kalyani]

Good question and brilliant answer. Thanks.

[KASTURI SETHI]

Replies by Sh. Rajagopalan Ranganathan always enhance my knowledge in all the fields. Whenever I find some problem I go through his replies posted in the past years. I really relish his active participation in this forum.

[Ganeshan Kalyani]

Right Sir. I agree to your point.

[Rajagopalan Ranganathan]

Thanks for the complementary remarks posted by experts in this forum

[Greeshma Vp]

Thank you for sharing your views with clear references. The info is really helpful.

AI Summary

LLP as body corporate affects reverse charge applicability for service tax, especially in partial reverse charge services.
The debate concerns whether an LLP is subject to the service tax reverse charge regime: service tax instruments refer to ''partnership firm'' for some reverse charge services, while the LLP statute explicitly defines body corporate to include a limited liability partnership; consequently, classification under the LLP statute may determine whether LLPs fall within reverse charge terminology, with particular uncertainty remaining for partial reverse charge services like works contracts.