GST: There being no clarity on whether all legal services provided by legal

practitioners and firms would be governed by reverse charge mechanism, no

coercive action can be taken against lawyers and law firms for non-compliance
with any legal requirement under the CGST Act, IGST Act or the DGST Act till
further clarification is issued by the Centre and the State in this regard

[2017] 83 taxmann.com 202 (Delhi)

HIGH COURT OF DELHI
J. K. Mittal & Co.
v.
Union of India
S. MURALIDHAR AND PRATHIBA M. SINGH, JJ.
W.P. (C) NO. 5709 OF 2017
CM NO. 23814 OF 2017
JULY 12, 2017

J.K. Mittal, Hitender Mehta and Atul Krishna, Advs. for the Petitioner. Sanjeev Narula, Abhishek
Ghai, Advs. and Gautam Narayan, Addl. Standing Counsel for the Respondent.
ORDER

S. Muralidhar, J. Notice. Mr. Sanjeev Narula, learned counsel accepts notice on behalf of Union of
India (Respondent No. 1) an d.Mr. Gautam Narayan, learned Additional Standing Counsel accepts notice
on behalf of Govt, of NCT of Delhi (GNCTD) (Respondent No. 2).
2. Notice will issue to Respondent No.3 i.e. the Goods and Service Tax Council (GST Council) through its
Secretary. Petitioner is permitted to additionally serve the notice dasti on the Secretary to the GST
Council.
3. This petition is by J. K. Mittal & Company, which is a proprietary concern of which Mr. J. K. Mittal,
Advocate, who appears in person, is the Sole Proprietor. The Petitioner states that he provides legal
services including consultancy, opinion, drafting, appearances before Courts etc. Mr. Mittal states that
although he has an office only in Delhi, he represents his clients throughout the country before various
High Courts and Tribunals outside Delhi.
4. The grievance of the Petitioner is that contrary to the recommendations of the GST Council
(Respondent No. 3) at its 14th meeting held on 19th May, 2017 and 16th meeting held on 11th June 2017,
Notification No. 13/2017-Central Tax (Rate) dated 28th June, 2017 as well as Notification No.
13/2017-State Tax (Rate) dated 30th June, 2017, have been issued respectively, by the Union of India
(Respondent No. 1) and the GNCTD (Respondent No. 2), which are per se in violation of the Central
Goods and Service Tax Act 2017 (CGST Act), the Delhi Goods and Service Tax Act 2017 (DGST Act)
read with Article 279 A of the Constitution of India and have adverse consequences to lawyers in general
including himself. Accordingly, in this petition the constitutional validity of the aforesaid notifications is
challenged.
5. In addition, the petition also challenges Notification No.5/2017-Central tax dated 19th June, 2017
issued by the Union of India and Notification No. F3(10)/Fin(Rev-I)/2017-18/DS-VI/340 dated 22nd
June, 2017 issue by the GNCTD essentially on the ground that these notifications are contrary to the
recommendations of GST Council. The petition also challenges the constitutional validity of Section 9 (4)
of CGST Act, Section 5(4) of The Integrated Goods and Services Tax Act, 2017 (IGST Act) and Section 9
(4) of DGST Act. He points out that this provision was not to be found in the model laws prepared by the
GST Council. It seeks to collect GST on 'reverse charge' basis from a person registered under the CGST
Act, IGST Act or DGST Act in respect of goods supplied and services received by such person from a
person who has not been so registered. Mr Mittal submits that this provision lacks a proper corresponding
machinery provision to facilitate its implementation, and is therefore ultra vires the statute. According to
him this provision is incapable of being complied with and is bound to cause undue hardship to the persons
registered under the aforementioned three statutes.
6. In addition the above main points of challenge, in support of his plea for urgent interim relief Mr Mittal
submits that under Article 279 A of the Constitution of India, the GST Council is a constitutional body.
Article 279 A (4) (c) of the Constitution of India states that the GST Council "shall make
recommendations to the Union and the States on the model Goods and Services Tax Laws, principles of
levy, apportionment of Goods and Services Tax..." Consistent with this requirement a number of
provisions of the CGST Act including Section 9 (1), 9 (2), 9 (3) and 9 (5) envisage notifications being
issued by the central government "on the recommendations of the Council." The categorical averment is
that the impugned notifications are in violation of this mandatory statutory requirement inasmuch as the
GST Council had recommended that legal services as a whole would be amenable to GST only on 'reverse
charge' basis. To make good this assertion, Mr. Mittal draws the attention of the Court to the document
titled "SERVICES UNDER REVERSE CHARGE AS APPROVED BY GST COUNCIL". Row 3 of this
chart reads as under:-
"SERVICES UNDER REVERSE CHARGE AS APPROVED BY GST COUNCIL
The fitment of rates of services were discussed on 19 May 2017 during the 14 GST Council meeting
held at Srinagar, Jammu & Kashmir. The Council has broadly approved the GST rates for services at
Nil, 5%, 12%, 18% and 28%. The list of services that will be under reverse charge as proved by the
GST Council is given below. The information is being uploaded immediately after the GST Council's
decision and it will be subject to further vetting during which the list may undergo some changes. The
decisions of the GST Council are being communicated for general information and will be given
effect to through gazette notifications which shall have force of law.
S.No. Service Provider of Percentage of service Recipient of Percentage service
service tax payable by Service tax payable by any
Service Provider person other Service
Provider
3 Services provided or An individual Nil Any 100%
agreed to be provided advocate or firm of business
by an individual advocates entity
advocate or firm of
advocates by way of all
legal services directly or
indirectly
7. In contrast, Notification No. 13/2017-Central Tax (Rate), dated 28m June, 2017 in relation to the above
entry reads as under:
"GSR (E).- In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods
and Services Tax Act 2017 ( 12 of 20 17), the Central Government on the recommendations of the
Council hereby notifies that on categories of supply of services mentioned in column (2) or the Table
below supplied by a person as specified in column (3) of the said Table, the whole of central tax
leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse
 charge basis by the recipient of the such services as specified in column (4) of the said Table:-
S. Category of Supply of Services Supplier of Service Recipient of Service
No.
2 Services supplied by an individual An individual advocate including a Any business entity
advocate including a senior advocate by senior advocate or firm of advocates located in the taxable
way of representational services before territory
any court, tribunal or authority, directly or
indirectly, to any business entity located
in the taxable territory including where
contract for provision of such service has
been entered through another advocate
or a firm of advocates or by a firm of
advocates, by way of legal services to a
business entity.
8. Notification No.l3/2017-State Tax (Rate), dated 30th June, 2017 issued by the GNCTD is on the same
lines. The case of Mr. Mittal is that the expression "provision of such services" following the expression
"located in the taxable territory" restricts the exemption to only 'representational services' provided by a
legal practitioner before any court, tribunal etc. and not to all legal services provided by such legal
practitioner or a firm.
9. A further difficulty expressed by Mr. Mittal is that he and certain other lawyers had, in compliance with
the provisions of the Finance Act 1994 (FA), got themselves registered way back in 2011 under FA as
service providers. After a period of about six months the provision of legal services was notified as being
taxable under 'reverse charge' basis. However, there was no provision in the FA to allow for
de-registration. Thus Mr Mittal's FA registration continues. Mr. Mittal draws attention to Section 22(2) of
the CGST Act, which reads as under:-
"22 (2) Every person who, on the day immediately preceding the appointment day, is registered or
holds a licence under an existing law, shall be liable to be registered under this Act with effect from
the appointed day."
10. He submits that the mere clarification that all legal services are amenable to GST on reverse charge
basis may not solve his problem. A legal practitioner like himself who is already registered under the FA
would have to be exempted from registration under the GST laws under Section 23 (2) read with Section
22 (2) of the CGST and the corresponding provisions of the IGST Act and DGST Act.
11. One of the central issues that requires to be addressed is whether the impugned Notification No.
13/2017 dated 28th and 30th June, 2016 cover all legal services not restricted to representational services
rendered by legal practitioners. The ancillary question is whether there is any requirement of registration
by legal practitioners and/or firms rendering legal services under the CGST Act or the IGST Act or the
DGST Act even if they are earlier registered under the FA?
12. Mr. Mittal has pointed out that under Section 25 (3) of the CGST Act, it is open to a person, though not
liable to be registered under Section 22 or Section 24 of the CGST Act to get himself registered voluntarily
under the CGST Act. However, Mr. Mittal is clear that as far as he is concerned, he does not wish to be so
registered. His concern is that since his registration under the FA continues, by virtue of Section 22 (2) of
the CGST Act he is under an obligation to get registered under the CGST Act and thereby be subject to a
whole series of legal obligations including having to pay tax on reverse charge basis under Section 9 (4) of
the CGST Act and DGST Act and Section 5(4) of the IGST Act. He states that the prevalent uncertainty is
causing great inconvenience to him and other legal practitioners in the matter of receiving and rendering
services.
13. Both Mr. Narula, learned counsel appearing on behalf of the Union of India and Mr. Gautam Narayan,
learned counsel for the GNCTD seek a short adjournment to take instructions from the respective
governments to clarify the legal position in respect of the above impugned notifications. In particular they
seek time to obtain a clarification whether all legal services (not restricted to representational services)
provided by legal practitioners and firms would be governed by the reverse charge mechanism under the
CGST Act, the DGST Act and the IGST Act. They also seek time to obtain clarification regarding the
requirement of persons already registered under the FA Act being liable to get registered under the CGST
Act, the IGST Act or the DGST Act.
14. In view of the above submissions it is plain that as of date there is no clarity on whether all legal
services (not restricted to representational services) provided by legal practitioners and firms would be
governed by the reverse charge mechanism. If in fact all legal services are to be governed by the reverse
charge mechanism than there would be no purpose in requiring legal practitioners and law firms to
compulsorily get registered under the CGST, IGST and/or DGST Acts. Those seeking voluntary
registration would anyway avail of the facility under Section 25 (3) of the CGST Act (and the
corresponding provision of the other two statutes). There is therefore prima facie merit in the contention
of Mr Mittal that the legal practitioners are under a genuine doubt whether they require to get themselves
registered under the three statutes. In the circumstances, the Court directs that no coercive action be taken
against any lawyer or law firms for non-compliance with any legal requirement 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 in that regard by this Court.
15. It is clarified that any lawyer or law firm that has been registered under the CGST Act, or the IGST Act
or the DGST Act from 1st July, 2017 onwards will not be denied the benefit of such clarification as and
when it is issued.
16. It is further clarified that if an appropriate clarification is not able to be issued by the Respondents 1
and 2 by the next date, the Court will proceed to consider passing appropriate interim directions.
17. List on 18th July, 2017.
18. Order be given dasti under the signature of Court Master.