No Coercive Action Against Lawyers and Law Firms For GST Non-Compliance: Delhi HC

New Delhi: A bench of the Delhi High Court has asked the Centre not to take coercive action against any lawyer or law firm for failing to implement the Integrated Goods and Services Tax (IGST) Act, Central Goods and Services Tax Act (CGST) and the Delhi Goods and Services Tax Act (DGST), unless the central government issues clarification on the same.

The case was brought to the court after a petition by JK Mittal, owner of JK Mittal and Company, a Delhi-based law firm having clients in various courts and tribunals in India.

The petitioner contested that the notification issued by the central government and the Delhi government to pay taxes on all services offered by them was in violation with the provisions of the CGST Act and the DGST Act read with Article 279A of the Constitution of India and has negative consequences on the legal fraternity.

The petitioner stated that such a notification was completely contrary to the recommendation made by the GST Council that it was the receiver of the services who would be responsible for paying the taxes and not the law firm.

The petitioner had also raised another point of difficulty on why there is a need to re-register someone as lawyer under CGST Act for even those practitioners who were registered under the Finance Act way back in 2011. He has prayed that lawyers registered under the Finance Act must be exempted from such a requirement under the new law.

The court has now observed that there “is no clarity on whether all legal services (not restricted to representational purposes) provided by legal practitioners and firms would be governed by the reverse charge mechanism”.

The bench, comprising justices S Muralidhar and Pratibha M Singh, has asked the Centre to direct that the government cannot take any coercive action against any lawyer or law firms for non-compliance with any legal procedure 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 from the Delhi High Court.