The Supreme Court, last day stayed all the proceedings pending before the Delhi and Chattisgarh High Courts relating to petitions challenging the levy of Goods and Services Tax (GST) on services provided by individual lawyers or firms.
The Centre has approached the Supreme Court under Article 139A of the Constitution of India seeking the transfer the petitions submitting that the issues involved in the petitions were identical.
The bench of CJI Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud issued notices to the respondents and sought their response.
The Delhi High Court, while hearing a petition filed by J.K. Mittal & Company had sought for clarification on the applicability of reverse charge mechanism on legal services (not restricted to representational services) on lawyers.
In the above petition, Mr. Mittal, impuning a notification issued by the Central Government, contended that the provision was not to be found in the model laws prepared by the GST Council. He further contended that GST Council is a constitutional body established under Article 279A of the Constitution. He pointed out that the recommendations of the Council are binding on the Central and State Governments and the Notifications issued inconsistent with the recommendations are legally not sustainable.
Justices S. Muralidhar and Prathibha M Singh, while granting interim relief to the petitioners, further directed the Government to clarify the position in order to remove ambiguities in the provisions relating to RCM on lawyers and restricted the Government from taking coercive measures against the lawyers who has not obtained registration.
The petition challenged notifications issued by the Centre and Delhi Government, wherein it was prescribed that advocates and law firms would pay the tax on all services offered by them. Only representational services were made an exception, dictating that it would be the clients who would pay the tax for such services. The Petitioner has claimed that this is contrary to the recommendation made by the GST Council that the service recipient would pay the tax on all services offered by a lawyer and a law firm.
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