Now Reading: Delhi HC: insolvency professionals must collect, deposit GST
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Delhi HC: insolvency professionals must collect, deposit GST
The Delhi High Court has ruled that advocates acting as insolvency professionals must collect Goods and Services Tax (GST) from clients and deposit it with the government under the forward charge mechanism.…
The Story in Brief
The Delhi High Court has ruled that advocates acting as insolvency professionals must collect Goods and Services Tax (GST) from clients and deposit it with the government under the forward charge mechanism. A division bench of Justices Prathiba M Singh and Shail Jain held that such services are distinct from legal work and fall under the specific service code for insolvency and receivership.
The court rejected advocate Kanwal Chaudhary's argument that being an advocate exempted him from GST registration. Chaudhary had been appointed interim resolution professional for Ireo Fiveriver Private Limited and faced a dispute over Rs 49.04 lakh in fees. The Insolvency and Bankruptcy Board of India had earlier directed him to issue GST-compliant invoices. The Bar Council of India supported the court's view that insolvency functions differ from conventional legal services.
The Indian Opinion
Some advocates claimed their insolvency work was 'legal services' to dodge GST. The court rightly saw through that, insolvency professionals manage companies, not argue cases. This ruling closes a loophole and ensures uniform taxation for a regulated class. It also protects proper revenue collection. The real test will be whether other professionals try similar classification tricks and how quickly the revenue department enforces compliance.
Source: barandbench.com
This story was synthesised by AI from the source linked above.
