Reverse Charge on Legal Services

Central Government corrects the following three notifications by issuing corrigendum notifications dated 25-9-2017 with respect to reverse charge on legal services.

Notification No. 10/2017 IGST - Dated: 28-6-2017 - Categories of services on which integrated tax will be payable under reverse charge mechanism (RCM) under IGST Act

Notification No. 13/2017 CGST - Dated: 28-6-2017 - Categories of services on which tax will be payable under reverse charge mechanism (RCM) under CGST Act

Notification No. 13/2017 UTGST - Dated: 28-6-2017 - Categories of services on which union territory tax will be payable under reverse charge mechanism (RCM) under UTGST Act

Entry no. 3 of IGST and entry no. 2 of the CGST and UTGST (both) has been corrected as follows:

for -

(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 provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity.”,

read

(2)

“Services provided by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly. Explanation.- “legal service” means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.”.

It appears that government has made an attempt to resolve the issues raised before the High Courts.

But it is to be seen to what extent the aforestated corrected notifications by way of corrigendum notifications would address the following issue raised in the writ petition before the Delhi High Court [2017 (7) TMI 542 - DELHI HIGH COURT]

"One of the central issues that requires to be addressed is 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. The ancillary question is 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?"

See:

JK Mittal & Company Versus Union of India & Ors. - 2017 (7) TMI 542 - DELHI HIGH COURT

Also see:

J.K. Mittal & Company, Legalance IP Corp LLP Versus Union of India & Others - 2017 (9) TMI 1165 - DELHI HIGH COURT

 

Reverse charge on legal services broadened to include advisory and representational work under GST notifications. Corrigenda amend reverse-charge entries to treat 'services provided by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly,' as taxable, and add an Explanation that 'legal service' includes advice, consultancy, assistance in any branch of law and representational services, thereby broadening the scope beyond representational services before courts, tribunals or authorities.