Gujarat High Court Grants Interim Relief To Lawyers Against Service Tax/ GST Payment Notices

Granting interim relief to Lawyers, the Gujarat High Court has stayed coercive actions against the lawyers in connection with demand notices by the CGST (Central Goods and Services Tax) Department with regard to the levy of GST/Service tax.

The bench of Justice J. B. Pardiwala and Justice Nisha M. Thakore passed this ad-interim order as it took note of an order of the Orissa High Court that was passed last year directing the Commissioner GST to issue clear instructions to all the officers in the GST Commission rates in the state not to issue any notice demanding payment of service tax/GST to practising lawyers.

Essentially, the Court was hearing a plea filed by Gujarat High Court Advocates Association and the president of the Association who have moved the Court challenging the action of the Respondents/CGST Dept in issuing notices against the members of the Association/Lawyers demanding payment of service tax/GST.

It was submitted before the Court that legal services provided by advocates of the partnership firm of advocates, business entities having turnover below Rs. 10 lacs in last financial year or any other person other than business entity are exempted from Service Tax

However, the Plea added that under no circumstances can there be any liability of service tax or GST on the advocates in so far as legal services are concerned which includes representational services.

In this regard, the plea avers that in the past few months, the members of the Petitioners Association have been issued multiple notices for non-payment of the service tax, which is completely contrary to the law.

"That the notices which are issued upon the members of the petitioner association are mechanical and are being passed without even checking whether the assessee is a lawyer or not and when the lawyers have replied to the authorities the said reply is ignored and show cause notices are issued with a claim that they never replied...many of the advocate members have filed their reply that they are exempted with the authority, yet the authority claiming that they have not received the same have issued show-cause notices" the plea added.

Before the Court, Advocate Masoom K. Shah, appearing for the petitioner association, argued that High Court lawyers have received many such notices in the past week as the Income Tax Department (which sends the data to the CGST dept) is ignorant of the fact that whether the concerned individual is a lawyer or not who is eligible for reverse charge mechanism under the law.

In view of this, the Bench, while granting interim relief to the association members, issued the following order:

"We take notice of the order passed by the Orissa High Court dated 31/3/2021...The matter requires consideration. By way of an ad-interim order, we direct that no coercive action shall be taken against advocates, law firms of advocates including LLPs of advocates providing legal service, for non-compliance with any legal requirements under the CGST, DGST, or IGST."

Case title - GUJARAT HIGH COURT ADVOCATES ASSOCIATION v. UNION OF INDIA