Friday, January 18, 2013

Stay on Service Tax under Reverse Charge on Legal Services by Delhi High Court

Service tax on legal services provided by an advocate (whether individual or firm) to any business entity has been imposed vide the Finance Act, 2012 under reverse charge mechanism wherein service recipient is liable to deposit service tax on fees paid to advocates.

High Court of Delhi vide order dated 21.09.2012 has stayed the implementation of this amendment in a petition (W.P.(c) No. 5957/2012) led Mr. A. S. Chandhiok, Sr. Adv. with Mr. Ruchir Bhatia, Adv. for Delhi Tax Bar Association.

Therefore, any business entity receiving legal services of an advocate must not deposit service tax under reverse charge till further notice.