Breaking:No Coercive Action Against Lawyers & Law Firms For Non-Compliance With GST Until Centre’s Clarification: Delhi HC [Read Order]

The Delhi High Court on Wednesday directed the Centre to abstain from taking any coercive action against lawyers and law firms for non-compliance with any legal requirement under the CGST Act, IGST Act or the DGST Act till further clarification is issued by the Centre and the State in this regard.

The Bench comprising Justice S. Muralidhar and Justice Pratibha M. Singh opined that as of date, there is no clarity on whether all legal services provided by legal practitioners and firms would be governed by the reverse charge mechanism.

It observed, “If in fact all legal services are to be governed by the reverse charge mechanism than there would be no purpose in requiring legal practitioners and law firms to compulsorily get registered under the CGST, IGST and/or DGST Acts. Those seeking voluntary registration would anyway avail of the facility under Section 25 (3) of the CGST Act (and the corresponding provision of the other two statutes). 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.”

The Court is hearing a Petition filed by J.K. Mittal & Company, which has challenged notifications issued by the Centre and Delhi Government, wherein it was prescribed that advocates and law firms would pay the tax on all services offered by them. Only representational services were made an exception, dictating that it would be the clients who would pay the tax for such services.

The Petitioner has claimed that this is contrary to the recommendation made by the GST Council that the service recipient would pay the tax on all services offered by a lawyer and a law firm.

Besides, the Petitioner has also sought clarification on the need for re-registration for lawyers who had already registered themselves under the Finance Act, 1994.

The Court has now asked the Centre and the State to respond to the Petition, listing the matter on 18 July. It clarified that if an appropriate clarification is not issued by the next date, it will proceed to pass appropriate interim directions.

Read the Order Here