ARCHITECT

Date of Introduction: 16.10.1998 vide Notification No.53/98-ST dt.07.10.1998.

Definition:

“Architect” means any person whose name is for the time being, entered in the register of architects maintained under section 23 of the Architects Act, 1972 and also includes any commercial concern engaged in any manner, whether directly or indirectly, in rendering services in the field of architecture.
(Section 65(6) of Finance Act, 1994 as amended)

Taxable events and scope of service:

Taxable service means any service provided to a client, by an architect in his professional capacity, in any manner. (Section 65(72)(p) of Finance Act, 1994 as amended)

The nature and scope of the services rendered by architects are well delineated under the provisions of the Architects Act. Broadly, the work of an architect starts from providing appropriate advice keeping in view the requirements of the client at the preliminary stage of initial sketches, specifications and drawing of plans, and consists of providing detailed drawings, approval of the drawings from the concerned authorities, supervision at each stage of construction, and till the point when the completion certificate is obtained from the authorities.
(Ministry’s F.No.B-11/3/98-TRU dt. 07.10.1998)

Value of Taxable Service:

Value of the taxable service shall be the gross amount charged by an architect for services rendered in his professional capacity in any manner. The services rendered by Architect are of a diverse nature and spread over long period of time. The payment of fees for each service is normally spelt out in the contract entered into with the client. The fees are paid at periodic intervals depending on the pace of completion of the work or at the completion of the whole project. Service tax has to be paid accordingly in terms of the contract.
(Section 67 of Finance Act, 1994 as amended)

Exemption and Exclusion:

1. In cases where an architect sub-contracts part/whole of his work to another architect, no Service Tax is required to be paid by the sub-contractor provided the principal architect has paid the Service Tax on the full value of services rendered by him to the client including the service provided by sub-contractor and provided the sub-contracting is in respect of the same service category. If the sub-contractor chooses to charge the client of principal contractor, in that case, the sub-contractor has to pay Service Tax.

2 Out of pocket expenses, which are reimbursable on actual basis, such as traveling, boarding and lodging expenses, are not includible in the value for levy of Service Tax. However, the assessee is required to produce documentary evidence for the purpose.
(Ministry’s F.No.B-11/3/98-TRU dt. 07.10.1998)

Case Law:

i. Hon’ble Mumbai High Court has dismissed the Writ Petition No.1174/2000 filed by Indian Institute of Architect, charging the constitutionality of the levy alleging hostile discrimination.

ii. Hon’ble Gujarat High Court in SCA No.7220/99 filed by the Gujarat Institute of Civil Engineers and Architects passed the decision in which the Writ Petition has been finally dismissed.

With the result of above dismissals of Writ Petitions, the levy of Service Tax on the service provided by the Architect is held valid.