Discriminative levy of service
tax (ST) on Practising Chartered Accountants
This article
deals with the discriminative levy of service tax (ST) on Practising Chartered Accountants
(CA) vis-à-vis the Practising advocates.
India – a
country which places a due emphasis on the concept of equality & which is
one of the fundamental principle as laid down in the glorious preamble of our
constitution, has certainly failed in adhering to its own created laws further
ensuing ambiguity in the system.
Look what
I’ve got you this time – “The Baffling Game of LAW”... Read on & get
amazed……
SYNOPSIS- All services provided by a CA are subject to
levy of ST. There are certain similar services rendered by advocates, which are
not subject to any levy of ST. Levy of ST on services provided by CA has always
been an intriguing matter. Take a look.
Initially all
the services provided by a Practising Chartered Accountant in his professional
capacity in any manner were taxable.
But, we got
some consolation, whereby all services provided by CA were granted exemption
except two services viz. Accounting and Auditing., the benefits were withdrawn
& all services of a practicing CA were brought to the tax net again.
On the basis
of strong representations, the Government exhibited some leniency, &
exemption was granted to services relating to representing the client before
any statutory authority in the course of proceedings initiated under any law
for the time being in force, by way of issue of notice.
But the said
benefit was also taken away with the introduction of negative list. So, a CA is
now in the same position as he was in the beginning of the levy in 1998.
Authorized representative (AR)-
Following
rules & acts allows both the CA & the Advocate to act as an AR for
their clients in the legal proceedings:
- ·
Wealth Tax
Act, 195
- ·
Income taxAct,
1961
- ·
Gift Tax
Act, 1958 (now kept under suspension)
- ·
Central
Excise (Appeals)Appeal Rules, 2001
- ·
Central
Excise Act, 1944
- ·
Finance Act
1994,
- ·
Customs
(Appeals) appeals Rules, 1982
- ·
Customs Act,
1962
- ·
Company Law
Board Regulations, 1991
- ·
Foreign
Exchange Management Act, 1999
This shows
that both CAs and advocates are treated at par and as equals so far as their
entitlement and qualification to act as an AR is concerned.
Renewed status from 01-07-2012
From
1-7-20121-7-12 onwards, all services are taxable except those specified in the
negative list under Section 66D of the Finance Act,1994 or in the Mega
exemption notification
Effect on
CAs-
► Tax Audit Firm
► Chartered Accounting Firm
► Chartered Accountants
The services
carried out by CAs/advocates to a client are regarded as an activity for consideration.
No exemption
has been granted to CAs neither in the “Negative list” nor in the “Mega
Exemption notification”.
Exemption to practicing Advocate
OMG!!!
The
notification No. 25/2012–ST, grants exemption in respect of services provided
by an advocate or a partnership firm of advocates by way of legal services to
1. an
advocate or partnership firm of advocates providing legal services;
2. any
person other than a business entity; or
3. a
business entity with a turnover up to R10 lakh in the preceding financial year.
There is no
as such ground which has till now granted any justification with regard to this
discrimination.
Full reverse
charge mechanism:
Notification states that service
tax liability connected with the legal services rendered by an advocate/Firm of
advocates is to be discharged by the client receiving the services.
How’re you
feeling now haan? Here also CAs have
been betrayed by law ruefully.
A peep into the ARTICLE 14 of our
Constitution:
It states-
Equality before law: “The State shall not deny to any person equality before
the law or the equal protection of the laws within the territory of India.”
Equal
protection means the right to equal treatment under similar circumstances.
Article 14
only prohibits unequal treatment of persons similarly situated and
(discrimination in levy of tax with the same level placed CAs amounts to
prohibition of law)
And my
clients who are advocates proudly say!!!!!
“ Saab! Hum
Service kahaan dete hai….. hum to desh seva karte hai !!!!!
Yeh kahaan
ki insaafi ….
CA kare to
service aur Advocate kare toh Desh
Seva!!!! Wah bai Wah !!!!
