Gujarat HC stays order against Service Tax and GST Payment notices on lawyers

The Gujarat High Court passed an interim order to stay any coercive actions against the lawyers on GST demand notices. The CGST department issued these notices to levy GST and service tax.

The Gujarat High Court Advocates Association had filed a petition seeking interim relief from GST and service tax levy on practising lawyers and LLPs. They were members of the association, and the President of the association represented before the court on behalf of the lawyers.

The bench comprised of Justice Nisha M. Thakore and Justice J. B. Pardiwala based their decision on the hearing by the Orissa High Court dated 31st March 2021. The CGST commissioner had to clearly instruct state officers to refrain from issuing show-cause notices for GST demand on practising lawyers.

The given cases involve lawyers or firms with annual aggregate turnover of the previous financial year falling below the threshold limit for GST registration of Rs.10 lakh. However, they have been issued notices to pay GST, including reverse charge cases.

Also, there cannot be GST liability if legal services before the High Court are representative. The notices issued are not in line with the GST provisions that exempt such services. The officer does not cross-check if the assessee is a lawyer or not.

Accordingly, the Gujarat High Court passed an interim ruling that no coercive action must be taken on such advocates, practising lawyers, firms, or LLPs to prevent the GST law.

The income tax department sends data to the GST department, including cases of reverse charge mechanism. In such cases, the lawyers are not liable to pay GST. Yet the department had issued notices without verification.

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