Position regarding applicability of GST on Legal Services provided by individual Advocates /Senior Advocates/Firm

Position regarding applicability of GST on Legal Services provided by individual Advocates including Senior Advocates and a Firm of Advocates

applicability of GST on Legal Services

Ministry of Finance

Press Release

Dated: 15th July, 2017

Position regarding applicability of GST on Legal Services provided by individual Advocates including Senior Advocates and a Firm of Advocates. 

There are points being raised about the applicability of GST on legal services provided by advocates – whether it is in forward charge or reverse charge. It may be mentioned that there is no change made in taxation of legal services in the GST era. 

In this context, it is further clarified that legal service has been defined to mean any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority. 

It is further clarified that notification No. 13/2017-Central Tax (Rate) dated 28.6.2017 (Serial No. 2)specifies, inter alia,the following service under reverse charge mechanism,- 

“Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity.” 

The words “by way of legal services” are preceded and succeeded by comma. Therefore, the said words apply to an individual advocate including a senior advocate and a firm of advocates. Legal services provided by either of them are liable for payment of GST under reverse charge by the business entity.The words “by way of representational services before any court, tribunal or authority….” appear in conjunction with senior advocate without a comma and merely describe the nature and mode of representational services provided by a senior advocate to a business entity. It, therefore, follows that legal services, which includes representational services, provided by advocates are under reverse charge. 

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DSM/SBS/JKW 
(Release ID :167455)

Clarification on GST on Legal Services. All legal services are under reverse charge.

Clarification on GST on Legal Services. All legal services including representational services provided by senior advocates are under reverse charge.

Clarification on GST on Legal Services

Ministry of Finance

Press Release

Dated: 15th July, 2017

Clarification regarding GST w.r.t. Legal Services by Advocates including Senior Advocates 

There are points being raised about the applicability of GST on legal services provided by advocates – whether it is in forward charge or reverse charge. It may be mentioned that there is no change made in taxation of legal services in the GST era.

2. In this context, it is further clarified that legal service has been defined to mean any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.

3. It is further clarified that notification No. 13/2017-Central Tax (Rate) dated 28.6.2017 (Serial No. 2)specifies,inter alia,the following service under reverse charge mechanism,-

“Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity.”

4. The words “by way of legal services” are preceded and succeeded by comma. Therefore, the said words apply to an individual advocate including a senior advocate and a firm of advocates. Legal services provided by either of them are liable for payment of GST under reverse charge by the business entity.The words “by way of representational services before any court, tribunal or authority….” appear in conjunction with senior advocate without a comma and merely describe the nature and mode of representational services provided by a senior advocate to a business entity. It, therefore, follows that legal services, which includes representational services, provided by advocates are under reverse charge.

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DSM/SBS/JKW
(Release ID :167452)

GST Margin Scheme applicability for dealers in second hand goods, old and used empty bottles

GST Margin Scheme applicability for dealers in second hand goods in general and for dealers in old and used empty bottles in particular. 

GST Margin Scheme

Ministry of Finance

Press Release

Dated: 15th july, 2017

Position regarding applicability of the Margin Scheme under GST for dealers in second hand goods in general and for dealers in old and used empty bottles in particular. 

Doubts have been raised regarding the applicability of the Margin Scheme under GST for dealers in second hand goods in general and for dealers in old and used empty bottles in particular. 

Rule 32(5) of the Central Goods and Services Tax (CGST) Rules, 2017 provides that where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored. This is known as the margin scheme. 

Further, notification No.10/2017-Central Tax (Rate), dated 28.06.2017 exempts Central Tax leviable on intra-State supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods [who pays the central tax on the value of outward supply of such second hand goods as determined under sub-rule (5)] from any supplier, who is not registered. This has been done to avoid double taxation on the outward supplies made by such registered person, since such person operating under the Margin Scheme cannot avail input tax credit on the purchase of second hand goods. 

Thus, Margin Scheme can be availed of by any registered person dealing in buying and selling of second hand goods [including old and used empty bottles] and who satisfies the conditions as laid down in Rule 32(5) of the Central Goods and Services Tax Rules, 2017. 

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DSM/SBS/JKW
(Release ID :167447)

Timelines for applying GST registration for traders registered or not registered under any existing Law

Timelines for applying GST registration for traders registered or not registered under any existing Law. GST registration deadline is 30th July 2017. 

Timelines for applying GST registration

Ministry of Finance

Press Release

Dated: 15th july, 2017

Provisions related to registration under GST regime; Traders are requested to register now without waiting for the last date i.e. 30th July, 2017. 

As per the GST laws, one is required to take registration on or before 30thJuly, 2017. All traders are requested to register now without waiting for the last date.

If one is carrying-out any business and have an Annual Aggregate turnover in the preceding Financial Year exceeding Rs. 20 lakh (Rs. 10 lakh in Special Category States), you need to register in all the States/Union Territories from where you are making taxable supplies. However, one need not register if one is engaged exclusively in the supply of exempted goods or services or both.

The timelines for applying for registration are as follows:-

Registered under any of the existing law

Migrated

Liable for registration in GST regime

Provisional Ids issued need to be converted to GSTIN by submitting necessary documents in 3 months (i.e. by 22nd September 2017)

Not liable for registration in GST regime

Need to apply for cancellation in 30 days (i.e. by 22nd July, 2017)

Not-Migrated Liable for registration in GST regime

Need to apply for registration within 30 days (i.e. by 22nd July, 2017)

Not registered under any of existing law

Liable for registration in GST regime

Become liable from 01/07/2017

Need to apply for registration within 30 days (i.e. by 30thJuly, 2017)

Become liable after 01/07/2017

Need to apply for registration within 30 days from becoming liable for registration

Taking registration in GST is a very simple process, and the comfort of the taxpayer has been kept in mind while designing the procedure. You can take registration from the comfort of your home by filing an online application on the common portal https://www.gst.gov.in/. All one need is a valid PAN, email id and a mobile number. Once these 3 details are verified, one will be required to furnish other details relating to his/her business. There is no need to submit any physical documents (unless a query is raised and documents asked for) and all necessary documents can be scanned and uploaded. If there are no queries, one will receive his/her registration online within 3 working days from submission of online application.         

It’s simple. But what will happen if one doesn’t get registered?

More than anything, getting registered is for one’s own benefit. If one is liable to take registration but don’t get registered, one will not be able to enjoy the benefit of input tax credit. Not only he/she, but any registered person, purchasing from him/her may not be able to get the input tax credit. Not obtaining registration, though liable to do so, would also attract penalty.

Getting registered would lead to growth in one’s business. Prospective buyers, who are registered under GST, will prefer to buy from suppliers who are also registered under GST, as this would entitle them to the input tax credit. This also means that one is contributing his bit towards nation building, by ensuring that appropriate taxes are collected and paid to the Government. Therefore, traders are requested to register under GST immediately without wasting any more time.

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DSM/SBS/JKW
(Release ID :167446)

Donation made to BJP-Congress not claimed in return allowed following Supreme Court judgment

Donation made to BJP-Congress not claimed in return allowed following Supreme Court judgment that ITAT powers not limited in dealing with claim of the assessee not made before AO.

Donation made to BJP-Congress

ABCAUS Case Law Citation:
ABCAUS 1293 (2017) (07) HC

The Question for determination:
Whether in the facts and in the circumstances of the case the Learned Income Tax, Appellate Tribunal erred in law in allowing the deduction under section 80GGB in respect of donation made by the assessee to the political parties.

Important Case Laws Cited/relied upon:
Goetze (India) Ltd. Vs. CIT reported in 284 ITR 323
Jute Corporation of India Ltd. Vs. CIT (1991) 187 ITR 688 (SC)
Additional Commissioner of Income Tax, Gujarat vs. Gurjargravures Private Ltd. (1978) 111 ITR
CIT Vs. Mahalaxmi Sugar Mills Co. Ltd. reported in (1986) 160 ITR 920 (SC)

Brief Facts of the Case:
The respondent assessee was a reputed listed company of Wadia Group.During the FY 2005-06, the assessee made donation to political parties namely Congress and BJP to the tune of Rs. 45 lakhs and Rs. 80 lakhs respectively. However, in the return of income filed by the assessee this was not claimed as a deduction. The assessment was accordingly made. However the assessee preferred an appeal before the CIT(A) claiming that the Assessing Officer (‘AO’) did not allowed deduction of political contribution u/s 80GGB of the IT Act, 1961 (‘ the Act’).

CIT(A) observed that the appellant on its own disallowed the contribution in the return of income and neither claimed as a deduction under Chapter-VIA of the Act in its return nor claimed by filing a revised return nor made a claim before the A.O. during the course of assessment proceedings. and therefore, the claim of the assessee that the AO had not allowed deduction of political contribution u/s 80GGB of the Act was found to be factually incorrect.

Aggrieved by the order of the CIT(A), the assessee preferred an appeal before the Tribunal which held that the Hon’ble Supreme Court had held that the appellate authority being the tribunal did have the powers to direct the Assessing Officer to accept the claim of assessee, though the same has not been made in the original return nor has been claimed in the revised return. Following the ratio laid down by the Hon’ble Supreme Court, the ITAT directed the AO to grant the assessee’s claim of deduction u/s 80GGB of the donations made by the assessee to Congress party and BJP.

Contention of the Respondent Assessee:
It was contended that the Supreme Court in another case had held that there is a duty cast on the Income tax Officer to apply the relevant provisions of the Indian Income tax Act for the purpose of determining the true figure of the assessee’s taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set-off, it cannot relieve the Income tax Officer of his duty to apply section 24 in an appropriate case.

Observations made by the Hon’ble Calcutta High Court:

The Hon’ble High Court observed that there was similarity on facts between the case at hand and that in Goetze (India) Ltd. in that the respective deductions were not claimed before the Assessing Officer. However, the CIT(A) dismissed the appeal of the assessee following Goetze (India) Ltd. in which the Supreme Court had declared that the issue was limited to the power of the assessing authority and does not impinge on the power of the Tribunal under section 254 of the Act. Hence, the CIT(A) held in favour of the Revenue at that stage and the Tribunal thereafter, in favour of the assessee.

The Hon’ble High Court further observed that In Jute Corporation of India Ltd. on similar facts the Supreme Court had remitted the matter to the Tribunal to consider the merits of the deduction raised before and permitted by the Appellate Assistant Commissioner..

The Hon’ble High Court also considered the facts in the case of Gurjargravures Private Ltd where the assessee had not claimed exemption before the I.T.O and the assessment was completed accordingly. The assessee then appealed to the Appellate Assistant Commissioner and one of the grounds of appeal was that the I.T.O had erred in not giving the assessee any benefit under section 84 of the Act. The Appellate Assistant Commissioner dismissed the appeal on the ground that the question of error on the part of the I.T.O did not arise as no claim for exemption had been made before him. On further appeal the Tribunal took a different view and referred the following question to the Gujarat High Court.

“Whether on the facts and in the circumstances of the case it was competent for the Tribunal to hold that the Appellate Assistant Commissioner should have entertained the question of relief u/s 84, and to direct the income tax officer to allow necessary relief?”

The Supreme Court in answering the question raised before the High Court held that the question referred to the High Court should have been answered in the negative.

The Hon’ble High Court opined that there is no conflict between the Gurjargravures Private Ltd. and Goetze (India) Ltd. In Gurjargravures Private Ltd. the Tribunal itself did not consider to allow the claim for relief. In the former a claim for exemption was for the first time put up before the Appellate Assistant Commissioner who rejected the claim as not made before the I.T.O. This rejection was set aside by the Tribunal with direction upon the Appellate Assistant Commissioner to entertain the question of relief claimed by the assessee in that case. The Supreme Court held that it was not competent for the Tribunal to have done so. The distinction between the two authorities eliminating any conflict is that in Gurjargravures Private Ltd.  the competence of the Tribunal to direct the Appellate Assistant Commissioner to entertain a claim not made before the I.T.O was found to be lacking. In Goetze (India) Ltd. the Supreme Court held that the assessing Authority’s power was limited but not that of the Tribunal in the context of dealing with a claim of the assessee therein not put forward before the Assessing Officer.

Held:
The Hon’ble High Court answered the question in the negative and in favour of the assessee. The appeal of the Revenue was dismissed.

Donation made to BJP-Congress
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