Petition Challenges GST On Advocate Services Leading To Cost Escalation, Guj HC Notice To Centre, State & GST Council

Petition prays for input tax credit on expenses incurred for advocates' services

An advocate has moved the Gujarat High Court challenging the Goods and Service Tax to be paid by litigants on services provided by advocates in absence of any provision for availing input tax credit leading to escalation of the professional fee so charged.

The high court has issued notices to the Centre, the Gujarat government and the GST Council while listing the petition for June 21.

The petition has been filed by advocate Nipun Singhvi who challenged the vires of Section 17(2) and 17(3) of the Central Goods and Services Tax Act, 2017 and the Gujarat (State) Goods and Services Tax Act, 2017 vis-à-vis Article 14, 19, 21 & 265 of the Constitution of India and prayed that the said provisions be declared void and unconstitutional.

The petition said the provisions under challenge restrict the credit of the input tax credit on goods/services or both used by advocates for effecting taxable legal services and exempt legal services.

Advocate Vishal J Dave, counsel for the petitioner, submitted before the court that, “The tax to be paid by the litigant on taxable legal services in the absence of provision for availing of input tax credit by advocates is leading cascading of  taxes since the tax component in the form of taxes on goods and services or both used by advocates, including the petitioner, for providing the said taxable legal services becomes part of the cost of the advocates which is passed on to the clients by way  of professional fee on which again GST is chargeable.”

The petition prayed for directions to the government to put in place a mechanism for availing input tax credit on the expenses incurred with respect to goods and services availed by the advocates.