1. Introduction on GST Applicability on Advocate Services

 

 

Under the Goods and Services Tax (GST) regime, legal services provided by advocates are subject to specific provisions. GST law recognizes the importance of legal professionals and provides certain exemptions and reverse charge mechanisms to ease compliance.

 

 

2. Meaning of advocate, advocate services and senior advocate

 

 

The meaning of these words has not been defined in the CGST Act,

However

As per definitions provided by Notification No 12/2017 Central Tax (Rate):-

2(b) “advocate” has the same meaning as assigned to it in clause (a) of sub-section (1) of section 2 of the Advocates Act, 1961 (25 of 1961)

2(zm) “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

As per Advocate Act, 1961

Section 2(1) (a) of Advocate Act 1961

 “Advocate” means an Advocate entered in any roll under the provision of The Advocate Act 1961.

 Section 2(1) (k) of Advocate Act 1961

“roll” means a roll of advocates prepared and maintained under this Act;

 Section 2(1) (n) of Advocate Act 1961

“State roll” means a roll of advocates prepared and maintained by a State Bar Council under section 17. 

 

If a person fulfils the conditions required for an admission as an advocate, he may be enrolled as an advocate by the State Bar Council. The Conditions to be fulfilled for being enrolled as an advocate have been stated in Section 24 of the advocate act 1961. An application for an admission as an advocate shall be made in the prescribed form to the State Bar Council within whose jurisdiction the applicant proposed to practice. The State Bar Council is required to refer every application for admission as an advocate to its enrolment committee, which shall dispose of the application in the prescribed manner. 

 

Section 16 of Advocate Act 1961

 

Senior and other advocates: - 

(1) There shall be two classes of advocates, namely, senior advocates and other advocates.

 (2) An advocate may, with his consent, be designated as senior advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability standing at the Bar or special knowledge or experience in law he is deserving of such distinction.

 (3) Senior advocates shall, in the matter of their practice, be subject to such restrictions as the Bar Council of India may, in the interest of the legal profession, prescribe.

 (4)  An advocate of the Supreme Court who was a senior advocate of that Court immediately before the appointed day shall, for the purposes of this section, be deemed to be a senior advocate.

 

 

 

3. Let’s read our constitution preamble

 

 

THE CONSTITUTION OF INDIA

 

WE, THE PEOPLE OF INDIA,

having solemnly resolved to constitute India into a

SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC

and to secure to all its citizens:

JUSTICE, social, economic and political;

LIBERTY of thought, expression, belief, faith and worship;

EQUALITY of status and of opportunity;

and to promote among them all

FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;

 

IN OUR CONSTITUENT ASSEMBLY

this twenty sixth day of November 1949,

do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.

 

As per constitution of India, we are provided with a Right of Justice, therefore ideally there should not be any GST on representational services before any court of law.

  

Therefore, as per Notification no 12/2017 central tax (Rate) (Point No. 45) 

Following exemptions have been granted to the advocates as amended by 

Notification No 02/2018 Central Tax (Rate) dated 25^th Jan 2018, and 

Notification No 21/2019 Central Tax (Rate) dated 30^th Sep 2019

 

 

S. No.	Chapter, Section, Heading, Group or Service Code (Tariff)	Description of Services	Rate (per cent.)	Condition
45	Heading 9982 or Heading 9991	Services provided by- (a) an arbitral tribunal to – (i) any person other than a business entity; or (ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017); (iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity; (b) a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services to- (i) an advocate or partnership firm of advocates providing legal services; (ii) any person other than a business entity; or (iii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017); (iv) the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity; (c) a senior advocate by way of legal services to- (i) any person other than a business entity; or (ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017 (12 of 2017). (iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity.	Nil	Nil

  

 

4. As per Notification no 11/2017 central tax (Rate)

 

Heading 9982 -- Legal and accounting services -- 18%

 

 

5. Reverse Charge Applicability on Advocate Services: -

 

 

 As per Notification No 13/2017 Central Tax (Rate) dated 28^th June 2017

 

Category of Service	Supplier of Service	Receiver of Service
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	An individual advocate including a senior advocate or firm of advocates	Any business entity located in the taxable territory.

 

 Explanation (c) of Notification No 13/2017 Central Tax (Rate) -

 

What is the definition of business entity??

“the business entity located in the taxable territory who is

litigant, applicant or petitioner, as the case may be,

shall be treated as the person who receives the legal services for the purpose of this notification.”

 

Explanation (e) of Notification No 13/2017 Central Tax (Rate) amended by Notification no. 22/2017 Central Tax (Rate) dated 22-8-2017 -

 

Will partnership firm of advocates will include LLP as well? 

A limited liability partnership formed and registered under the provisions of the Limited Liability Partnership Act 2008 shall also be considered as a partnership firm or firm.

 

 

 

6. Clarification through Circulars

 

 

Circular No. 27/01/2018-GST

 

 

Whether legal services other than representational services provided by an individual advocate or a senior advocate to a business entity are liable for GST under reverse charge mechanism? 

Yes. In case of legal services including representational services provided by an advocate including a senior advocate to a business entity, GST is required to be paid by the recipient of the service under reverse charge mechanism, i.e. the business entity. 

 

7. Let’s understand GST Applicability through this table in various cases:-

 

Service Provider	Service Receiver	GST Applicability	Reverse Charge Applicability
Partnership Firm of Advocates or Individual Advocate (Other than Senior Advocate)	Any Person other than a business entity	Exempt	NA
Senior Advocate	Any Person other than a business entity	Exempt	NA
Partnership Firm of Advocates or Individual Advocate (Other than Senior Advocate)	a business entity with an aggregate turnover up to such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017. [Registered or Unregistered]	Exempt	NA
Senior Advocate	a business entity with an aggregate turnover up to such amount in the preceding financial year as makes it eligible for exemption from registration under the Central Goods and Services Tax Act, 2017. [Registered or Unregistered]	Exempt	NA
Partnership Firm of Advocates or Individual Advocate (Other than Senior Advocate)	Business Entities other than above [Registered or Unregistered]	Taxable	Yes
Senior Advocate	Business Entities other than above [Registered or Unregistered]	Taxable	Yes
Partnership Firm of Advocates or Individual Advocate (Other than Senior Advocate)	Central Govt, State Govt, Local Authority, Union Territory, Govt Authority or Govt Entity	GST Applicable before 25th Jan 2018, After 25th Jan 2018 GST is exempted. [Notification No. 2/2018- Central Tax (Rate)]	NA
Senior Advocate	Central Govt, State Govt, Local Authority, Union Territory, Govt Authority or Govt Entity	GST Applicable before 25th Jan 2018, After 25th Jan 2018 GST is exempted. [Notification No. 2/2018- Central Tax (Rate)]	NA