 The Legal Consultancy service was brought under Service Tax net

from 01.09.2009. The Taxable service was defined under sub-

clause (zzzzm) of clause (105) of Section 65 of the Finance Act,
1994.
 The Legal services provided to a business entity by any other
business entity in relation to advice, consultancy or assistance in
any branch of law were covered.
 However, the services provided by way of appearance before any
court, Tribunal or any authority and the services provided by the
individuals were excluded.

The sub-clause (zzzzm) has been proposed to be substituted in the

following manner:

(zzzzm) (i) to any person, by a business entity, in relation to

advice, consultancy or assistance in any branch of law, in any
manner;

(ii) to any business entity, by any person, in relation to

representational services before any court, tribunal or authority;

(iii) to any business entity, by an arbitral tribunal, in respect of

arbitration.
 The following services are included:
 
1. Services of advice, consultancy or assistance provided by a
business entity to individuals are covered.
2. Representational services provided by any person to a business
entity; and
3. Services provided by arbitrators to business entities.

Now, under the Taxable Legal Consultancy services, the service

provided by Business entity to another Business entity, Business entity
to Individual and Individual to Business Entity are covered.
However, the Legal service provided by an Individual Lawyer provided
to an individual will also get covered under the taxable service and
service tax will become payable on all services.

Thus, the overall outcome of this levy will be that individual lawyers
will covered under the service tax net. They have to pay the service tax
on services provided to business entities. But the services provided to
individuals will be exempt.

The second outcome of this levy will be on Chartered Accountants.

Earlier the exemption was given to them on representation work on the
ground that when lawyers are not paying tax on such activity then they
should not be taxed. Hence the exemption under Notification no.
25/2006-ST, dated 13.07.2006 was given to them. But now the lawyers
will plead that when the exemption is given to CAs then they should also
be exempted otherwise their services will be costlier. They will not be
able to compete with Chartered Accountants.