Impact & implications of GST on Legal Practitioners: Clarification sought from Government

Delhi High Court: Taking note of the fact that the legal practitioners are under a genuine doubt whether they require to get themselves registered under the Central Goods and Service Tax Act 2017 (CGST Act), the Delhi Goods and Service Tax Act 2017 (DGST Act) and the Integrated Goods and Services Tax Act, 2017 (IGST Act), the Court directed that that 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 Govt. of NCT of Delhi (GNCTD) and till further orders.

The matter was brought before the Court by Mr. J.K. Mittal, advocate, who contended that he provides legal services including consultancy, opinion, drafting, appearances before Courts etc. and although he has an office only in Delhi, he represents his clients throughout the country before various High Courts and Tribunals outside Delhi. The petitioner had challenged the validity of the Notifications issues by the Central Government and the GNCDT for being violative of the Central Goods and Service Tax Act 2017 (CGST Act), the Delhi Goods and Service Tax Act 2017 (DGST Act) read with Article 279 A of the Constitution of India. He has also challenged the constitutional validity of Section 9 (4) of CGST Act, Section 5(4) of The Integrated Goods and Services Tax Act, 2017 (IGST Act) and Section 9 (4) of DGST Act.

The division bench of S. Muralidhar and Pratibha M. Singh, JJ noticed 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 and if 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 Act, IGST Act and/or DGST Act. 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).

The Court further clarified that any lawyer or law firm that has been registered under the CGST Act, or the IGST Act or the DGST Act from 1″ July, 2017 onwards will not be denied the benefit of such clarification as and when it is issued. Listing the matter to be taken up on 18.07.2017, the Court said that if the Central Government and GNCDT fail to give an appropriate clarification by the next date, the Court will proceed to consider passing appropriate interim directions. [JK Mittal & Company v. Union of India, 2017 SCC OnLine Del 9087, order dated 12.07.2017]

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