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Reverse charge- legal service

Priyanka Kandwal (finance & Accounts) (58 Points)

02 December 2013

Dear All,

Advocate has raised a bill of RS 35000 which includes 2000/- for Misc Expense. The amount of Misc Exp is separately shown in the invoice. Do my company need to deposit service tax on 35000/- or 33000/-.

Thanks in advance.!!

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CA PRIYUL SHAH (JOB) (901 Points)
Replied 02 December 2013

Service tax is on service provided by advocate. So it shall be Rs.33000 only. Misc Exp shall not include any professional charges & shall be pure reimbursement.

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Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 02 December 2013

Dear Priyanka, You should pay service tax on Rs. 35,000/- which is the 'gross amount charged' by service provider (Advocate) as per section 67 read with Rule 5(1) of Valuation Rules, 2006. What proof do you have that the Misc. Expenses is towards the claim of actual expenses by the Advocate? Suppose, in the same bill, the Misc. Exp. is shown as Rs. 10,000/- then will you pay service tax on Rs. 25,000/-? The manner of billing cannot alter the legal position.

Note: Rule 5(1) has been held ultra vires section 67 by the Hon'le Delhi High Court in the case of Intercontinental Consultants but the matter is pending before the Honb'le Supreme Court awaiting it's finality.

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