Services
provided or to be provided by an arbitral tribunal is taxable if such service
provided to a business entity which is located in
the taxable territory and having turnover exceeding
Rs 10 lakh.
Such service is taxable and liability to pay
tax has been cast on the recipient i.e business entity who will pay tax under reverse
mechanism.
However
services provided by an arbitral tribunal were exempted from service tax if
provided to
(i) any person other than a business entity; or
(ii) a business entity with a turnover up to Rs 10 lakh in the
preceding financial year,
but the said entry stands omitted with
effect from 1.4.2016 vide Notification
No. 9/2016 –ST dated 1st March
2016
Thus
services provided by an arbitral tribunal which was exempted vide mega
exemption notification are now made taxable. As this service is taxable now, now
question arise that whether service tax would be payable under reverse charge in
case of services provided by arbitral tribunals and individual arbitrators of
the arbitral tribunal.
CBEC
vide Circular No. 193/03/2016-ST, Dated: May 18, 2016 has clarified that service Tax
liability for services provided by an arbitral tribunal (including individual
arbitrators of the tribunal) shall be on the service recipient if it is a
business entity located in the taxable territory with a turnover exceeding Rs.
10 lakh in the preceding financial year.
Thus
Business having turnover 10 Lakh in preceding financial year is still liable to
pay tax under Reverse charge mechanism.
[Refer:-
Circular No. 193/03/2016-ST,
Dated: May 18, 2016]
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