Gujarat High Court sanctions Interim Relief to Lawyers

Gujarat High Court sanctions Interim Relief to Lawyers

Lawyers were granted interim relief by the Gujarat High Court by staying coercive actions against them over the CGST (Central Goods and Services Tax) Department's demand notices regarding the levying of GST/Service tax

It was a joint bench of Justice J. B. Pardiwala and Justice Nisha M. Thakore who passed this interim order as it took note of an order made by the Orissa High Court in 2021. It was directed in it that the Commissioner GST issue clear instructions to all the employees of the GST Commission in the state not to seek payment of service tax or GST on legal bills from practicing lawyers.

The Court was deciding an appeal filed by Gujarat High Court Advocates Association and its president, who filed the appeal challenging the actions of Respondents and the CGST Dept in issuing notices demanding payment of service tax/GST from members of the Association and attorneys.

The Service tax exemptions were claimed before the Court for legal services provided by attorneys practicing with a partnership firm of attorneys, businesses with turnover less than Rs. 10 lacs in FY 2021 or any other individual.

In the plea, however, it was reiterated that the advocates are not liable for service taxes or GST in respect of legal services and that this applies to representation as well.

Specifically, the claim states that members of the Petitioners Association have received multiple notices for not paying the service tax in the past few months, which is totally at odds with the law.

"Members of the petitioner association were issued notices in a mechanical manner without checking whether the assessee was one of its members, and when the attorneys replied, the reply was ignored, and show cause notices were issued back to the attorneys claiming that they never responded to them...A majority of the advocates had replied that they were exempted, however, the authority asserted that it hadn't received any reply and had issued notices asking for the proof of exemption," added the plea.

Lawyer Masoom K. Shah, appearing for the petitioner association, revealed that there have been a number of notices sent to High Court lawyers in the past week since the Income Tax Department (which sends the data to the CGST dept) is ignorant of whether the individual in question is an employee of a law firm or not, hence eligible for reverse charge.

As a consequence of this, the Bench granted interim relief to association members by issuing the following order:

"We have taken note of the order passed by the Orissa High Court on 31/3/2021...We will conduct a thorough study of the matter. By way of an ad-interim order, we direct that no coercive measures will be taken against advocates, law firms of advocates, including LLPs of advocates in supplying legal services, for non-compliance with CGST, DGST, or IGST."