Legal & Consultancy Services Under RCM Is Liable To Service Tax: CESTAT

The Bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has stated that “in absence of any reply or any supporting documents, Legal fees expense incurred by the assessee are expenses towards Legal services. Accordingly, Service Tax on Legal Fee expense incurred by the assessee is upheld.”

In this case, the assessee/appellant was registered under Service Tax for providing services under Manpower Recruitment/ Supply agency Services.

A show cause notice was issued to the assessee by the Commissioner confirming the demand of Service Tax in respect of legal & consultancy services under RCM under proviso to sub-section (2) of Section 73 of the Finance Act, 1994 along with interest.

The assessee filed an appeal to the Commissioner (Appeals) who rejected the appeal. The assessee has challenged the order passed by the Commissioner (Appeals) before the Tribunal.

The assessee submitted that the Commissioner has erred in comparing Service Tax the Gross receipts as per Form 26AS and receipts as per Profit & Loss account as these receipts were accounted in the Profit & Loss account.

The bench noted that the services provided by the assessee are covered under the definition of Taxable Services in the light of the changed provisions of the Finance Act, 1994 made applicable with effect from 01.07.2012

The bench stated that the impugned order notes that the assessee failed to provide any relevant authentic documents like invoices in original work orders in original etc to justify their claim of duplication of demand in case of few of their clients.

In the absence of any authentic evidence in the form of original invoice etc showing the actual value of taxable services provided by the assessee during the relevant period, the bench found that there is no reason to interfere with the computation of service tax liability against the assessee in the impugned order.

The bench held that the Legal fees expense incurred by the assessee are expenses towards Legal services.

In view of the above, the Tribunal dismissed the appeal and upheld the Service Tax on Legal Fee expense incurred by the assessee.

Case Title: Saisun Outsourcing Services Private Limited v. Commissioner of Central Goods, Service Tax, Jabalpur

Case Number: Service Tax Appeal No. 54991 Of 2023

Counsel for Respondent/ Department: Manoj Kumar

Click Here To Read/Download The Order