 and Advocates.webp)
The Delhi High Court has held that advocates working as Insolvency Professionals (IPs) under the Insolvency and Bankruptcy Code, 2016 (IBC) are required to pay Goods and Services Tax (GST) under the forward charge mechanism, rather than the reverse charge mechanism applicable to their conventional legal services.
A Division Bench of Justice Prathiba M. Singh and Justice Shail Jain delivered the judgment on August 13, 2026, in W.P.(C) 9410/2021.
Background of the Case
The petition was filed by Kanwal Chaudhary, an advocate registered with the Bar Council of Delhi since 1995 who later qualified as an Insolvency Professional. He was appointed as an Interim Resolution Professional for Ireo Fiveriver Pvt. Ltd. by the NCLT Delhi Bench in December 2018.
A dispute arose over GST on his professional fees. After the NCLT directed payment of the outstanding amount of Rs. 49,04,988, it sought clarification on who was liable to pay GST. The IBBI subsequently held that insolvency and receivership services were not covered by the reverse charge mechanism and directed Chaudhary to submit GST-compliant invoices.
Chaudhary challenged the IBBI's March 9, 2021 decision before the High Court, arguing that advocates continued to fall under the reverse charge mechanism even when functioning as Insolvency Professionals.
Court's Observation
The Bench examined the GST treatment of advocates and Insolvency Professionals separately. It noted that while legal services provided by advocates are generally covered by the reverse charge mechanism, services provided by Insolvency Professionals are not specifically included in Notification No. 13/2017-Central Tax (Rate). Consequently, the normal forward charge mechanism applies to such services.
The Court also examined the GST classification of services. It found that “insolvency and receivership services” have a specific classification under service code 998241, separate from the classification for legal services.
The Bench observed that
“there cannot be any distinction in the manner in which Insolvency Professionals as a class are treated.”
It held that an advocate does not acquire a different GST treatment merely because of their separate professional qualification.
At the same time, the Court clarified that this ruling is limited to services performed by an advocate in the capacity of an Insolvency Professional. Conventional legal services rendered as an advocate would continue to remain under the reverse charge mechanism.
Decision
The Delhi High Court upheld the IBBI's March 9, 2021 order, holding that advocates acting as Insolvency Professionals under the IBC are governed by the forward charge mechanism and must obtain GST registration and comply with the applicable GST requirements.
The Court directed Kanwal Chaudhary to furnish GST-compliant invoices for the professional fees charged for his services as Interim Resolution Professional in CP(IB) No. 408/2018.
The petition was accordingly disposed of.
Case Details:
Case Title: Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors.
Case Number: W.P.(C) 9410/2021
Judge: Justice Prathiba M. Singh and Justice Shail Jain
Decision Date: August 13, 2026
-300x169.webp)
