Amarchand Mangaldas & Shroff, AZB Partners, Fox Mandal & Little, Luthra & Luthra,�Khaitan & Co., Remfry & Sagar,� Lakshmikumaran & Sridharan, Vaish Associates, Titus & Co, Singhania & Co. , J Sagar & Associates, Economic Laws Practice , ALMT Legal, DSK Legal, Kochchar & Co,, Nishith Deasi Associates, TriLegal, Zeus Law Associates, Paras Kuhad & Associates , Anand and Anand , Majmudar & Co., P H Parekh & Co. and all other Law Firms are required to pay service tax on legal services with effect from 1st September 2009 with the Government notifying vide Service Tax Notification No. 26/2009 dated 19th August 2009; the 1st day of September, 2009, as the date on which the provisions of the Finance Act, 2009 (33 of 2009), shall come into force.

Under sub-clause (zzzzm) of clause (105) of Section 65 of the Finance Act 1994 as amended vide Finance Act 2009; �taxable service� means any service provided or to be provided,-

�to a business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner:

Provided that any service provided by way of appearance before any court, tribunal or authority shall not amount to taxable service.

Explanation.�For the purposes of this sub-clause, �business entity� includes an association of persons, body of individuals, company or firm, but does not include an individual�

Thus only the charges for appearance before Court/Authorities are not subject to service tax. Further, the legal service provided to Individuals is also outside the scope and ambit of service tax. Legal Service provided by Advocates who are billing the clients in their own individual name also exempt from service tax.

The only solace for Law Firms is that they can avail the exemption of Rs 10 Lakh on billing with effect from 1st September 2009 under Service Tax Notification No. 6/2005�Service Tax, dated the 1st March, 2005 as amended vide Notification No. 8/2008-Service Tax New Delhi, the 1st March, 2008

However, they are required to obtain Service Tax Registration after filing ST-1 Form after crossing Billing of Rs 9 lakh as provided vide Notification No. 26/2005-Service Tax, dated the 7th June, 2005 as amended vide Service Tax Notification No. 9/2008 dated 1st march 2008.

But many Law Firms may cross the Billing of Rs 10 Lakh in 10 days and ,thereafter they will be required to charge service tax at the rate of 10.3 per cent(including Education Cess of 2 per cent on service tax and SHE Cess of 1 per cent on service tax amount) on the gross billing excluding appearance charges.

Further, the following services are also under service tax net with effect from 1st September 2009

service provided or to be provided

(zzzzk) to any person, by any other person, in relation to cosmetic surgery or plastic surgery, but does not include any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma;

service provided or to be provided

(zzzzl) to any person, by any other person, in relation to transport of �

(i)�� coastal goods;

(ii)�� goods through national waterway; or

(iii)�� goods through inland water.

Explanation.� For the purposes of this sub-clause,�

(a)�� coastal goods� has the meaning assigned to it in clause (7) of section 2 of the Customs Act, 1962;

(b)�� national waterway� has the meaning assigned to it in clause (h) of section 2 of the Inland Waterways Authority of India Act, 1985;

(c)�� inland water� has the meaning assigned to it in clause (b) of section 2 of the Inland Vessels Act, 1917