Service Tax – consulting work by Chartered accountants exempted

By Vijay Kumar

In the last budget, the exemption to CAs doing other work like representing, consulting etc, was withdrawn. The CA’s institute had represented to the government that this was discriminatory as a lawyer appearing before a court was not subject to Service Tax, but if a CA did the same job, he had to pay the Service Tax. Government has relented and exempted representation work done by CA/Cost Accountant/CS from Service Tax.

The notification exempts service by a practicing chartered accountant, a practicing cost accountant and a practicing company secretary respectively (???), in his professional capacity, to a client, 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, from the whole of service tax leviable.

Here the catch is the service should relate to represent the client before a statutory authority and there should have been a notice. Is drafting reply to a Show Cause Notice representation? Notice seems to be very important. In all cases of high handedness by the department, where they take action without notice, if the client is represented by a CA, the CA has to pay Service Tax as there was no notice.

Lawyers make a lot of money giving opinions. CAs can also do so, but they will have to pay Service Tax. Assessees do take professional help in making replies to Audit Objections. They should go to a lawyer rather than a CA, because there is no Service Tax for the lawyer.

Notification. No. 25 / 2006-Service Tax dated 13th July, 2006.

To err is human, but when the eraser wears out ahead of the pencil, you are overdoing it

– J. Jenkins