Delhi High Court re-iterates interim relief to lawyers as Govt. ‘Press Release’ faces withering attack

Delhi High Court modifies interim order and re-iterates that no coercive action is be taken against advocates/law firms of advocates including LLPs providing legal services, for non-compliance with any legal requirement under CGST, Delhi GST (DGST) or IGST Act.

The High Court further adds that even in case the above categories have registered themselves under GST regime, they shall not be denied the benefit of the interim order.

In view of the Finance Ministry press release as also submissions made by Central Govt.’s standing counsel to the effect that legal position prevailing under Finance Act, 1994 with regards to legal services, continues even under GST law.

The High Court instructs that until further orders all legal services provided by the aforementioned categories (including LLPs of advocates), will be continued to be governed by reverse charge mechanism.

The High Court, while posting the matter for further hearing to September, also takes note of several questions surrounding the ‘Press Release’ issued by the Central Govt./ Finance Ministry on July 16 seeking to clarify the applicability of GST on legal service. In particular, HC seeks answers on three questions :

  1. Under what authority of law such a Press Release could be issued and its legal sanctity?
  2. Whether on a conjoint reading of the Constitution and the GST Acts, the recommendations of the GST Council could be modified/ clarified/ amended by notification/circular/notice of Press Release?
  3. Whether there were any further recommendations of the GST Council on ‘legal services’ after what had been recommended at the 14th meeting of the Council?

Considering the importance of issues raised in the petition, HC orders Respondents including Union of India to file a para wise reply to the petition.

Decision Summary:

The interim order was passed earlier today by a division bench of Justice S. Muralidhar and Justice Pratibha M. Singh in a writ petition challenging the constitutional validity of reverse charge provisions in relation to legal practitioners under the GST law.

Advocate J.K. Mittal (also petitioner) appeared in person while the other petitioner Legalance IP Corp LLP was represented by Advocates Abhishek Rastogi, Rashmi Deshpande and Vanita Bhargava.