GST has been here for barely a month and it has already been dragged to Court by a lawyer in Delhi challenging the Govt Notifications imposing GST on the services of lawyers. The petition was filed by Mr. J K Mittal citing that these Notifications will have adverse consequences on lawyers in general; since the effect of imposition of ‘reverse charge’ on services would mean that GST will be collected from persons registered under one of the GST Acts (CGST, IGST or Delhi GST Act) would have to pay the GST in respect of a service availed from a person who is not registered under any of these Acts.

The Petition challenged the rules on the basis that there is no corresponding provision or machinery in the system to implement the rule, thus making is impracticable. The earlier Notification stood for the exemption of liability of lawyers/Firms in respect of all services provided by them to clients and only the client was to pay on the reverse-charge basis. He points out the technical disparities between the wordings used in the subsequent Notifications, in effect limiting the exemption only to representational services rendered by lawyers to clients. an additional difficulty pointed out by him is that the Finance Act had earlier required lawyers to register as service-providers, but the subsequent change of bringing it under the reverse-charge category did not bring with it any provision for de-registration.

The number of confusions raised by the apparently contradictory provisions on the earlier and current schemes, and the various Notifications under GST, led the Delhi High Court to clarify in its order that no coercive action should be taken against any lawyer or law firms for non-compliance with any legal requirement under the CGST Act, the IGST Act or the DGST Act till a clarification is issued by the Central Government and the GNCTD and till further orders in that regard by this Court. The Court also stated that if an appropriate clarification is not able to be issued by the Govt by the next date, the Court will proceed to consider passing appropriate interim directions.

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