RCM Applicable to Legal Services by Advocates/ Firms under GST till further Orders: Delhi HC Questions Legal Validity of Finance Ministry’s Press Release [Read Order]

Service Tax for Senior Advocates

A division bench of the Delhi High Court today said that all the legal services provided by advocates including senior advocates and Law Firms are subject to GST under reverse charge mechanism till the pronouncement of the final order.

The division bench comprising of Justices S Muralidhar and Pratibha M Singh, while passing the order questioned the legal sanctity of the press release issued by the Ministry of Finance on 15th July 2017.

The bench was hearing the plea filed by Advocate JK Mittal asking among other things that whether all legal services provided by legal practitioners and firms would be governed by the reverse charge mechanism under the GST law implemented by the Government from 1st July 2017.

Earlier, the Court expressed an opinion that there is ambiguity in the existing CGST and SGST provisions and hence, directed the Government to not to take any coercive actions against advocates, law firms of advocates including Limited Liability Partnerships (LLPs) of advocates providing legal services for non-compliance with any legal requirement under the new GST Acts.

Advocate Sanjay Narula, who appeared for the Centre, produced a Finance Ministry Press Release dated July 15, 2017, clarifying that reverse charge mechanism is applicable to legal services provided by individual Advocates including Senior Advocates and law firms under the new indirect tax regime.

While concluding, the bench observed that no coercive action would be taken against advocates, law firms of advocates including Limited Liability Partnerships (LLPs) of advocates providing legal services for non-compliance with any legal requirement under the CGST, DGST, or IGST Act.

It further held that the benefit of the interim order shall not be denied to 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 1st July 2017.

Read the full text of the Order below.

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