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A Quick Look

· 3 min read
FlaggGRC

A Quick Look at Import-Export of Legal Services

What is ‘Legal Services’?

  • As per the Services Export Promotion Council (SEPC):

A broad definition of legal services would include advisory and representation services as well as all the activities relating to the administration of justice (judges, court clerks, public prosecutors, state advocates, etc.).

Legal Services is one of the services that the SEPC has been mandated to promote the exports of.

  • As per the Service Tax Rules, 2012, Rule 2 (cca):

“Legal service” means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.

It’s a Taxable service under Service Tax.

‘Legal Services’ under GATS:

  • The GATS establishes a basic set of rules for world trade in services, a clear set of obligations for each Member country, and a legal structure for ensuring that those obligations are observed.
  • As per the WTO services sectoral Classification List (MTN.GNS/W/120), Legal Services are included under Professional Services.
  • All 149 Members of the WTO must abide by the GATS. It covers over 95% of global trade in services.
  • BUT in no country – any of the advisory or representation roles can be taken unless you are registered at the Bar to practice the Law of that country.

General Agreement of Trade in Services (GATS) covers four Modes of delivery of services in cross–border trade.

Legal Services in four Modes of Supply are as under:-

  • Cross-border Services (Mode 1): Cross border supply of legal services using Technological Services. For example – An Indian Law firm emails a memo to a client that is operating in the USA.
  • Consumption abroad (Mode 2): Purchase of Legal Services in the territory of another country. For example – An Indian Legal firm represents an American client in an Indian Court.
  • Commercial Presence (Mode 3): Expansion of a Legal Firm into another country. For example – An Indian Law firm establishes an office in USA.
  • Movement of natural persons (Mode 4): Law Professionals enter into a foreign territory temporarily to provide services. For example – An Indian lawyer provides Legal services by visiting a client in USA to prepare a business acquisition.

Current Cross-border Status:

  • Gradually, a lot of Indian firms are setting up offices abroad; with the only barriers of language in the non-English speaking countries
  • Prohibition under Advocates Act – if not registered at the Bar Council of India.
  • FDI is not permitted in this sector.

As per the Notification No. FEMA 22 /2000-RB dated 3rd May 2000, issued by RBI under Foreign Exchange Management (Establishment in India of branch or office or other place of business) Regulations, 2000-

Prohibition on establishing a branch or office in India by foreign firms. Permitted only with prior approval of RBI.

  • Many member countries viz US, EC, Australia, Singapore, Japan, China, Switzerland, New Zealand and Brazil have requested India for taking commitment in Legal Services.

Bibliography:

(Please Note: This is only a research based article with the support of the Bibliography mentioned herein. It only provides information and personal analysis concerning the given topic.)

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