RCM on Legal services

[Mratunjaya Vajramatti]

We have a Trust registered under GST and Received legal Sponsorship Services are we liable to pay tax under RCM ??

[Amit Agrawal]

With the understanding that said trust has taken registration under GST on its outward supply u/s 7 (1) of the CGST Act, 2017 (& thereby it being as 'Business Entity') and it got an aggregate turnover of such amount in the preceding financial year as makes it non-eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), such trust is liable to pay GST under RCM against 'Services received from an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly'.

It is worth noting that 'profit motive' is not a pre-requisite criteria to fall under the definition of 'business' u/s 2(17) of the CGST Act, 2017.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

W.r.t. sponsorship services (i.e. Services provided by way of sponsorship to any body corporate or partnership firm), GST is payable under RCM only when service-receiver is 'Any body corporate or partnership firm located in the taxable territory.'.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

As subject line of your query is 'RCM on Legal services' wherein text of the query used the word 'legal Sponsorship Services' (& I am unable to understand meaning of 'legal Sponsorship Services'), I tries to answer your query w.r.t. liability to pay GST under RCM against receipt of 'Legal services' and 'Sponsorship Services' separately.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Dear querist,

Here Trust is a business entity. It is engaged in supply against consideration. If any Trust or charitable organization supplies against consideration, that Trust is a business entity and cannot be treated as charitable. See .C.B.I. & C. Circular No. 66/40/2018-GST, dated 26-9-2018 Hence Tax under RCM is applicable on legal services.

Regarding the applicability of GST on Sponsorship Services, pl. elaborate your query.

[Padmanathan KV]

Ld friend Amit JI,

Supposing the turnover of the trust was below 20 Lakhs in preceding FY, and the trust had taken voluntary registration in current FY, would your answers differ? if so, how?

This is for my complete understanding as well as the understanding of readers in the said subject matter.

[Amit Agrawal]

@ Shri PadmanathanJi,

W.r.t. your post above, kindly refer to Serial No. 45 of Exemption Notification No. 12/2017- Central Tax (Rate) (as amended till date).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Dear All Experts,

The query is very very brief. It is silent about the constitution of legal firm from whom legal services were received.

It appears to me that we are more enthusiastic than the querist. All of us have made all-out efforts to reply to the query but no response has been received from the querist so far. We know how much hard work is involved in each reply posted here.

Non-response from the querist shows his lack of interest.

I agree with all the replies of Sh.Amit Agrawal, Sir. His thorough study on the issue and analysis and conclusion (despite it being very very brief query) speaks volumes of his hard work.

Disclaimer : These are my personal views/outpourings are meant for education purpose only and not for any court proceedings.

[Mratunjaya Vajramatti]

Thank you Amit Agarwal sir and Kasturi Shethi sir, i understood from your reply

But, what if Legal services provided by proprietor who is registered under GST and Charges GST in Invoice??

[Shilpi Jain]

Are the legal services provided by an Advocate?

AI Summary

Reverse charge on legal services: registered trusts receiving advocate services must pay GST under RCM when so liable.
A registered trust that makes taxable supplies is a business entity for GST; when it receives legal services from an individual advocate or a firm of advocates, GST is payable by the trust under the reverse charge mechanism. Sponsorship services invoke reverse charge only if the recipient is a body corporate or a partnership firm located in the taxable territory. Voluntary registration, turnover thresholds and the supplier's invoice treatment may alter the practical application and require reference to the exemption notification.