2017 (7) TMI 542 – DELHI HIGH COURT – 2017 (3) G. S. T. L. 321 (Del.) , [2017] 1 GSTL 1 (Del), [2017] 1 GSTL 35 (Del) – GST on legal services – Constitutional validity of Section 9 (4) of CGST Act – collection of 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 – 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?
–
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?
–
Held 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 govern
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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.
–
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.
– W.P.(C) 5709/2017 & CM No. 23814/2017 (stay) Dated:- 12-7-2017 – MR. S.MURALIDHAR AND MR. PRATHIBA M. SINGH, JJ. For The Petitioner : Mr. J. K. Mittal, Mr. Hitender Mehta and Mr. Atul Krishna, Advs. For The Respondents : Mr. Sanjeev Narula and Mr. Abhishek Ghai, Advs. for R-1. And Mr. Gautam Narayan, Additional Standing Counsel for GNCT of Delhi ORDER 1. Notice. Mr. Sanjeev Narula, learned counsel accepts notice on behalf of Union of India (Respondent No. 1) and Mr. Gautam Narayan, learned Additional Standing Counsel accepts notice on behalf of Govt. of NCT of Delhi (GNCTD) (Responde
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ate) 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
endations 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 14th GST Council meeting held at Srinagar, Jammu & Kashmi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
, 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. No. Category of Supply of Services Supplier of Service Recipient of Service 2 Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory including where contract for provis
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 d
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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. I
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =