Admin[By Shaleen Shah (Partner), VNCA]
This article appeared in the Feb-2012 edition of the Sales Tax Journal published by The Gujarat Sales Tax Bar Association
After amendments w.e.f. 01-05-2011, even Individual legal consultants are covered in respect to certain services – Legal Consultancy Service is applicable to any person providing legal consultancy – STPs issuing the VAT Audit Report may not be covered under the levy – stay granted by various High Courts applies to Lawyers & Advocates and may not hold good for other persons providing legal consultancy service.
Recently on passing away of Late Shri Narendra C. Mehta, the fraternity lost a stalwart. He was considered the `Nani Palkhiwala’ of sales tax. It was my good fortune to have been closely associated with him. I have always had a humbling feeling of being called his Partner in the Firm which he founded in 1950 with his close friend Late Shri Vinod R. Shah. As fate would have it, both friends & partners till the very end, passed away in a short span of 15 days, as if continuing their partnership in the after life. Unarguably the most fitting tribute to Narendra bhai or `NC’, as people would fondly refer to him as, has been given by Commercial Tax Tribunal President Respected Justice K.M. Mehta who has published a compilation of N.C. Mehta’s articles published in various journals and newspapers over the years. This compilation has truly immortalised `N.C. Mehta’.
Coming to the subject matter, service tax was first introduced on `Legal Consultancy Service’ from 01-09-2009 by the Finance (No. 2) Act, 2009 by inserting cl. (zzzzm) in S. 65 (105) of the Finance Act, 1994. The coverage of taxable service was limited to service provided by a business entity to any other business entity. Further, the taxable service was restricted to advise, consultancy or technical assistance in any branch of law, in any manner, but not appearance before any court, tribunal or an authority. Thus, service provided by an individual to any person and service received by the individual from any person was not liable to tax.
The Finance Act, 2011 (enacted on 8th April, 2011) substituted sub-clause (zzzzm) and substantially increased the scope of the levy w.e.f. 01-05-2011. The substituted definition in sub-clause (zzzzm) reads as follows:
“(zzzzm) (i) to any person, by a business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner;
(ii) to any business entity, by any person, in relation to representational service before any court, tribunal or authority;
(iii) to any business entity, by an arbitral tribunal, in respect of arbitration
