By TIOL News Service

NEW DELHI, JULY 19, 2017: KINDLY refer to GST - No coercive action be taken against any lawyer or law firms for non-compliance with any legal requirement under CGST/IGST/DGST Act: Delhi HC while reporting the Delhi High Court decision 2017-TIOL-1290-HC-DEL-MISC .

As mentioned therein, the matter was listed yesterday.

The Central Government Standing Counsel apprised the Court that on 15 July 2017, a press release has been published, which clarifies the issues involved namely that Notification no. 13 of 2017-Central Tax (Rate) applies to all legal services including advisory and consultation.

The High Court viewed that the Union of India had to follow the recommendations of the GST Council verbatim and had no power to modify the same; that prima facie, the wordings of the notification deviate from the recommendations;that the press release did not clarify the position.

During the course of hearing, several questions arose as regards the said Press Release itself.

In response, the Central Government Standing Counsel sought further time to seek instructions on the questions raised, in particular –

(i) Whether there were any further recommendations of the GST Council on 'legal services' after what had been recommended at the 14th meeting of the GST Council held on 19th May 2017;

(ii) Under what authority of law, such a 'Press Release' could be issued and by whom and the legal sanctity thereof.

(iii) Whether on a reading of Article 279A of the Constitution read with any of the provisions of the CGST, IGST and DGST Acts, the recommendations of the GST Council could be modified, clarified, amended etc. by a notification/notice/circular or 'Press Release' and, if so, by whom?

The Central government Standing Counsel sought time to produce the GST Council's recommendations on issuance of notification no. 12/2017-CGST (Rate) dated 28th June 2017.

As regards the issue raised in the matter of section 22(2) of the CGST Act, the Counsel sought time to ascertain if under the FA, 1994, a lawyer or law firm who got registered, could opt to de-register or surrender their registration and if a mechanism was devised for such purpose.

A written submission on behalf of the Respondent signed by Commissioner, Central Tax Commissionerate, New Delhi was also handed over to the Bench.

Considering the importance of the issues which involve interpretation of the relevant provisions of the Constitution of India and the statutes concerned, the High Court directed each of the respondents to file para wise reply to the petition and also specifically answer the queries noted in the Court's order dated 12 July, 2017 and the present order. The High Court also directed that a reply on behalf of the GST Council be filed separately through its Additional Secretary.

Pursuant to the assertion made on behalf of the respondents that to date no coercive action is taken against the lawyers, law firms or providers of legal services, LLPs for non-compliance with the legal requirement of the CGST, IGST and DGST, the Court directed that till further orders –

(i) 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; and

(ii) 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 will not be denied the benefit of this interim order.

(iii) In view of the Press Release issued by the Ministry of Finance and the instructions given to the Central Government Standing Counsel to the effect that the legal position that existed under the FA, 1994 as regards legal services being amenable to service tax under the reverse charge mechanism continuing even under the CGST, DGST or IGST Acts, till further orders, all legal services provided by Advocates, law firms of Advocates, or LLPs of advocates will be continued to be governed by the reverse charge mechanism unless of course any such legal service provider wants to take advantage of input tax credit and seeks to continue with the voluntary registration under Section 25(3) of the CGST Act and the corresponding provisions of IGST or DGST Act.

The matter is listed for hearing on 14th September, 2017.

(See 2017-TIOL-1331-HC-DEL-GST)