Ethics, Conflict of Interest and Professional Boundaries in GST Representation
Nearly a decade after its launch, questions about institutional fidelity to the GST's founding design have sharpened.
GST Reform and Structure
For decades, India's indirect tax regime had been shaped by a rigid constitutional division: the Union controlled taxes on manufacture (Central Excise), trade across borders (Customs Duty), and services (Service Tax), while the States taxed the sale of goods through Sales Tax and Value Added Tax (VAT). The two spheres rarely spoke to each other.
GST replaced this patchwork with a unified structure, though one that remained faithful to India's federal character. In intra-State transactions, both the Union and the State levy taxes simultaneously while Union Territories without their own legislatures impose UTGST. For inter-State transactions, the Union levies Integrated GST (IGST), which is subsequently apportioned between the Union and the destination State. This destination-based principle ensures that revenue flows to where consumption actually occurs.
A GSTP is a tax professional authorised to prepare returns and perform related activities on the basis of information furnished by a taxable person.
Ethical Issues
On August 15, 2025, the Prime Minister unilaterally announced what he termed the "Next Generation GST Reforms," presenting the GST Council with a fait accompli rather than a proposal for deliberation.
The Council approved a transition to a three-tier rate structure 5 meeting without any rigorous debate. The Union Ministry of Finance has estimated the annual revenue loss from this restructuring at no less than ₹48,000 crore. More troubling, perhaps, is the Council's transformation from a forum of federal negotiation into an instrument ratifying executive decisions.
The GST Appellate Tribunal exists precisely to adjudicate complex questions of fact and law within a specialised forum, yet practitioners routinely bypass GSTAT and steer clients directly toward High Court writ petitions. High Court briefs carry higher fees, greater visibility, and the appearance of aggressive advocacy.
What petitions often carry for the client is delay, disproportionate cost, and the risk of the Court declining interference on grounds that the statutory remedy was not exhausted.
Professional Boundaries
Crucially, the legal responsibility for GST filings remains with the taxpayer, not the practitioner.
The Allahabad High Court's ruling in Nishu v. Union of India provides important judicial clarity on a practitioner-facing issue. The Court held that GST authorities cannot compel the personal appearance of a taxpayer when the law expressly permits representation through an Advocate. It further directed the release of detained goods upon payment of the statutory penalty under Section 129(1)(a) of the Central Goods and Services Tax Act, 2017.
The ethical framework here is not merely procedural; it reflects a broader principle that professional services must not be reduced to competitive commercial transactions, where price becomes the primary signal of value.
Conflict of Interest
Section 116(2) of the GST Act specifies who may serve in the capacity of an Authorised Representative that is empowered to act on behalf of taxpayers and represent them before tax authorities. GST services form part of the broader category of professional services, and accordingly, all advertising related to such services must comply with the ICAI Advertisement Guidelines, 2008.
The ICAI guidelines and Section 116 provide guardrails, but guardrails do not substitute for conscience.
Conflict of interest surfaces quietly; in the practitioner who represents both buyer and supplier in a disputed transaction, in the consultant who structures advice around his own fee rather than the client's liability, or in the authorised representative who allows proximity to tax authorities to compromise the independence his client is entitled to expect.
The Supreme Court, in Chandra Shekhar Soni v. Bar Council of Rajasthan (AIR 1983 SC 1012), held that it is unprofessional to represent conflicting interests except by express consent given by all concerned after full disclosure of the facts, and that counsel's paramount duty is to the client, requiring the practitioner to refrain from anything that would harm the client's interest.
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