CITATION

01 GSTR 001

APPELLANT

J K Mittal & Company and others

RESPONDENT

Union of India and Others

COURT

High Court of Delhi, New Delhi

WRIT PETITION REF.

W.P.(C) 5709/2017& W.P (C) 6017 / 2017

DATE OF ORDER

18-07-2017

LEGISLATION REFERRED

Central Goods and Service Tax Act, 2017

The Integrated Goods and Services Tax Act, 2017

Constitution of India

SECTION/RULE

Section 9 (4)

Section 5(4)

Article 279 A

NOTIFICATION REFERRED

Notification Nos: 12 & 13/2017 Central Tax (Rate) dated 28/06/2017

Notification Nos: 5/2017 Central Tax dated 19/06/2017

SERVICES

Legal Services

GIST

Challenge of Constitutional Validity of Legal Services , whether the recommendations of the GST Council could be modified, clarified, amended etc by a notification/notice/circular of 'press release and whether all legal services (not restricted to representational services) provided by legal practitioners and firms would be governed by the reverse charge mechanism

FACTS :

GST Council had in the meeting held on 19th May, 2017 recommended that legal services as a whole would be amenable to GST only on 'reverse charge' basis.

However in Notification No. 13/20 17-Central Tax (Rate), dated 28th June, 2017 in the entry relating to liability to pay GST on reverse charge specified the category of service, in respect of legal services as “Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory.

The CBEC had issued a press release on 15/07/2017 clarifying that the expression “representational services” refers only to services of a senior advocate and that legal services including representational services of an advocate is under reverse charge . 

ISSUES :

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 the Delhi GST Act is challenged whether all legal services (not restricted to representational services) provided by legal practitioners and firms would be governed by the reverse charge mechanism.

The following issues are also involved

(i) Under what authority of law, such a 'Press Release' could be issued and by whom and the legal sanctity thereof.

(ii) Whether on a reading of Article 279 A of the Constitution read with any of the provisions of the CGST, IGST and DGST Acts, the recommendations of the GST Council could be modified, clarified, amended etc by a notification/notice/circular of 'press release' and, ifso, by whom?

DECISION  :

The matter is not yet decided. However the Delhi High Court has in Interim Orders dated 12/07/2017 and 18/07/2017 directed that

(i) no coercive action would be taken against advocates, law firms of advocates including Limited Liability Partnerships (LLPs) of advocate sproviding legal services for non compliance with any legal requirement under the CGST, DGST, or IGST Act; and

(ii) Any advocate, law firm of advocates, LLPs of advocates who are providers of legal services, who have registered under the CGST,DGST, or IGST Act from 1' July, 2017 will not be denied the benefit of this interim order.

(iii) In view of the Press Release issued by the Ministry of Finance, all legal services provided by advocates, law firms of advocates, or LLPs of advocates 'will be continued to be governed by the reverse charge mechanism unless of course any such legal service provider wants to take advantage of input tax credit and seeks to continue with the voluntary registration under Section 25 (3) of the CGST Act and the corresponding provisions of IGST or DGST Act.