Page 90 - CA Final GST

Badlani Classes

standing at Bar or special knowledge of experience in law he is deserving of such
distinction. Senior advocates shall, in matter of their practice, be subject to restrictions
prescribed by Bar Council of India in interest of legal profession.
Reverse Charge System : RCM :
1 Services provided by an individual An individual Any business entity
advocate including a senior advocate including located in the taxable
advocate or firm of advocate by a senior advocate or territory
way of legal services, directly or firm of advocates
indirectly
2. Service supplied by an arbitral An arbitral tribunal; any business entity
tribunal to a business entity located in the taxable
territory

GST Rate : 18%
Case Whether legal services other than representational services provided by an individual
advocate or a senior advocate to a business entity are liable for GST under reverse charge
mechanism?
Sol :
Yes. In case of legal services Including representational services provided by an advocate
including a senior advocate to a business entity, GST is required to be paid by the recipient
of the service under reverse charge mechanism, i.e., the business entity.
Que. An Advocate raised following bill on client which is a company providing services:
1- Legal fees - `50,000
2- Out of pocket expenses like typing, Xerox, travelling- `10,000
3- Court fee paid on behalf of client-`5,000
Calculate tax payable if rate of CGST is 9 and SGST is 9% .Can the company avail input
tax credit? The Bill of Advocate was dated 05-12-2017 and the bill amount was paid to
Advocate on 1-2-2018. What is due date of payment of tax? Both are in same State.
Ans. Advocate is not liable to pay tax. The client (company) is liable to pay tax on `60,000-
SGST @ 9% -`5,400. CGST @9% -`5,400.
GST is payable on out of pocket expenses as per valuation provisions. However, court fee
is paid on behalf of cli9ent as ‘pure agent’. Hence, on that amount, the client ( company)
is not liable to pay any tax.

Payment to Advocate was made within 60 days from date of his Invoice. Hence, tax is
payable along with GSTR-3 return to be filed on 20-03-2018.
Company can take input tax credit
Que. X & Co. a partnership firm of Advocate, is providing legal consultancy services, for the
second consecutive year. The firm furnishes the following information relating to the
services rendered, bills raised, amounts received relating to this service, for the month
ending 31-01-2018.
`
Free services rendered to poor people (Value of the services computed on 40,000
comparative basis)
Advances received from business clients for which no services has been 5,00,000
rendered so far
Services supplied to individuals who were not carrying on business 2,00,000
Compute tax liability if rate of GST is 18%
Ans. 1- No GST will be payable on free services rendered to poor people.
2- Tax payable on advance received of `5,00,000 [However, GST @ 18% is payable
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by business clients (i.e. service receiver) under reverse charge and not by X & Co.]

Central Goods & Services Tax Act, 2017