Delhi High Court Decision on GST on Lawyers

The GST has been here for barely a month now, but its anomalies have already dragged it to Court to resolve the ambiguities raised by the various Notifications issued by the Govt under the GST regime. The Delhi HC was recently faced with the first case of this sort, filed by a lawyer, questioning the confusion caused to him by some Notifications.

Title: J. K. Mittal & Co. v Union of India

Citation: W.P. (C) NO. 5709 OF 2017; CM NO. 23814 OF 2017 (Delhi High Court)

Coram:

  • MURALIDHAR, J.
  • PRATHIBA M. SINGH, J.

 

Matter: GST Notifications – contradiction with GST Council recommendations – confusion w.r.t “reverse charge” mechanism – imposition on services of lawyers.

 

Brief Statement of Facts:

The petition was filed by Mr. J K Mittal citing that these Notifications will have adverse consequences on lawyers in general; earlier Notifications of the Govt 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.

 

Decision of the Court:

Delhi High Court clarified 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.

 

Relevant portions of the Order

“….it is plain that as of date there is no clarity on whether all legal services (not restricted to representational services) provided by legal practitioners and firms would be governed by the reverse charge mechanism…”

“….There is therefore prima facie merit in the contention of Mr Mittal that the legal practitioners are under a genuine doubt whether they require to get themselves registered under the three statutes…”

“…no coercive action 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…”

“…any lawyer or law firm that has been registered under the CGST Act, or the IGST Act or the DGST Act from 1st July, 2017 onwards will not be denied the benefit of such clarification as and when it is issued.

“…..if an appropriate clarification is not able to be issued by the [UoI and GNCTD] by the next date, the Court will proceed to consider passing appropriate interim directions…”

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