The issue related to bringing the legal fraternity under the ambit of Service Tax has been discussed time and again. However, this time the Finance Minister has done what the earlier FM avoided in the past. With the introduction of Legal Consultancy Service, he broke the jinx of taxing the legal fraternity. The Finance (No. 2) Bill, 2009 proposes to include a new service vide Section 65 (105) (zzzzm). Accordingly, as in the case of management consultancy or engineering consultancy service, any consultancy, advice or technical assistance provided in any discipline of law is proposed to be subjected to service tax. However, the tax would be limited to services provided by a business entity to another business entity. It has been defined that a business entity includes firms, associates, enterprises, companies etc. but does not include an individual. Thus, services provided by an individual advocate either to an individual or even to a business entity would be outside the scope of the taxable service. Similarly, the services provided by a corporate legal firm to an individual would also be outside the purview of taxable service. Any service of appearance before any court of law or any statutory authority would also be kept outside this levy. Now the Provision of excluding the service value with respect to appearance might be a sigh of relief to all those in legal fraternity.
Taxable Services: Legal Consultancy Services