Exemption of Arbitral Tribunal from Service Tax

The Central Government has exempted the services provided by an arbitral tribunal to a business entity, in respect of arbitration from taxable services.  Notification No. 45/2011 (Click here to view) dated September  12, 2011 states that taxable services referred to under item (iii) of sub-clause (zzzzm) of clause (105) of section 65 of Finance Act, 1994 stands to exempted from service tax from the date of publication of the notification in the Official Gazette.

After the 2011 amendment of Section 65(105)(zzzzm) of Finance Act, taxable services included services provided or to be provided,

1. to any person, by a business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner;
2. to any business entity, by any person, in relation to representational services before any court, tribunal or authority;
3. to any business entity, by an arbitral tribunal, in respect of arbitration.

The said notification has removed item listed under item (3) listed above from the purview of service tax. However, the taxability of services rendered by lawyers in relation to arbitration or any ancillary taxable services rendered by arbitral institutions continues to be in vogue.