The doubt was raised whether the outsourcing of legal work to an associate by a law firm can be categorized under Business Support Service.

The Board has clarified that the services provided by lawyer in their professional capacity relating to law it are not taxable under the service tax.  The clarification of the Board is as follows

"The matter has been examined.  The scope of taxable service namely "business support service" has been explained in TRU's letter F.NO.334/4/2006-tru DATED 28.02.06.  As regards services provided by lawyers in their professional capacity relating to law, the Finance Minister has already made the position clear on the floor of Parliament.  It is also pertinent to note that the Empowered Committee of State Finance Ministers has included Legal Service in the list of services which are not presently taxed.  This has been accepted in principle".

Commissionerate of Service Tax, New Delhi

Legal professional services exempt from service tax - outsourcing to associates not treated as taxable business support service. Services rendered by lawyers in their professional capacity relating to law are not subject to service tax; outsourcing legal work to associates does not convert that activity into taxable business support service because the professional character of legal services governs tax treatment and an intergovernmental committee has included legal service among services not presently taxed.