Delhi HC Rules Insolvency Professionals Acting as Advocates Must Register Under GST and Pay Under Forward Charge

Kaustav Chowdhury
1 day ago
4 min read

In a ruling with significant implications for the dual-qualified professional community, the Delhi High Court has held that advocates who serve as insolvency professionals under the Insolvency and Bankruptcy Code, 2016 (IBC) must obtain GST registration and discharge their GST liability under the forward charge mechanism, not the reverse charge mechanism that ordinarily applies to legal services. The judgment, delivered on August 13, 2026 by a Division Bench of Justices Prathiba M. Singh and Shail Jain in Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors. (W.P.(C) 9410/2021), draws a sharp distinction between the capacity in which an advocate renders services: as a legal practitioner (subject to reverse charge) versus as an insolvency professional (subject to forward charge).

Background: The GST Treatment of Legal Services

Under the GST regime, services provided by advocates (including firms of advocates) are subject to the reverse charge mechanism (RCM) under Notification No. 13/2017-Central Tax (Rate). This means that when an advocate provides legal services to a business entity, the recipient of the service (not the advocate) is liable to pay the GST. This arrangement was designed to simplify compliance for advocates, who are also exempt from the requirement to obtain GST registration under Section 22 of the CGST Act, 2017, as long as they provide only services covered by the reverse charge notification.

The question that arose in this case was whether this reverse charge treatment extends to services provided by an advocate who is also registered as an insolvency professional under the IBC and renders services in that capacity, such as serving as an Interim Resolution Professional (IRP), Resolution Professional (RP), or Liquidator.

The Dispute: IBBI's Direction and the Advocate's Challenge

The petitioner, Advocate Kanwal Chaudhary, was enrolled with the Bar Council and also registered as an insolvency professional with the Insolvency and Bankruptcy Board of India (IBBI). In March 2021, while Chaudhary was serving as an Interim Resolution Professional, the IBBI directed him to issue GST-compliant invoices for his professional fees. Chaudhary challenged this direction, arguing that since he was an advocate, his services were covered by the reverse charge mechanism and he was not required to obtain GST registration or charge GST on his invoices.

Chaudhary's core argument was that an advocate remains an advocate regardless of the capacity in which they act. Since the reverse charge notification covers "services provided by an individual advocate or a firm of advocates," he contended that his services as an IRP should also fall within this category, with the recipient (the corporate debtor or its estate) bearing the GST liability under RCM.

The Delhi High Court's Analysis

The Division Bench rejected this argument. The court drew a clear distinction between the nature of services rendered by an advocate in their capacity as a legal practitioner and services rendered in the capacity of an insolvency professional. The court observed that Notification No. 13/2017-Central Tax (Rate) specifically covers "services supplied by an individual advocate including a senior advocate or firm of advocates by way of legal services." The notification does not cover services supplied by an insolvency professional.

The court noted that insolvency professional services are a distinct category of services under the GST framework. An insolvency professional performs functions prescribed under the IBC and its regulations, including taking control of the corporate debtor's assets, managing its affairs during CIRP, conducting the resolution process, and (in the case of a liquidator) distributing the liquidation proceeds. These are statutory functions that are fundamentally different from providing legal advice or representation.

Since insolvency professional services are not listed among the services notified for reverse charge treatment, the court held that the general rule of forward charge under Section 9(1) of the CGST Act applies. This means the insolvency professional (not the recipient of the service) is liable to charge and pay GST on the services rendered.

No Suspension of BCI Enrolment Required

An important ancillary finding in the judgment is that an advocate need not suspend or surrender their Bar Council enrolment to act as an insolvency professional. The court held that the two roles are not mutually exclusive. However, the GST treatment of the services rendered in each capacity must be determined separately based on the nature of the services and the applicable notifications.

Practical Impact on Dual-Qualified Professionals

The practical consequences of this ruling are significant. Advocates who are also insolvency professionals must now obtain GST registration (if they have not already done so), issue GST-compliant invoices for services rendered as insolvency professionals, charge GST under the forward charge mechanism, and comply with all return filing and compliance obligations under the CGST Act. However, for any legal services provided in their capacity as advocates (such as appearing in court, drafting pleadings, or providing legal opinions), the reverse charge mechanism continues to apply as before.

This bifurcation may create practical challenges, as professionals will need to maintain clear records distinguishing between services rendered as advocates (RCM) and services rendered as insolvency professionals (FCM). This is particularly complex in situations where an insolvency professional who is also an advocate may perform tasks that straddle both roles.

Key Takeaways

Case: Kanwal Chaudhary v. IBBI & Ors., W.P.(C) 9410/2021, decided August 13, 2026.
Bench: Justices Prathiba M. Singh and Shail Jain (Delhi High Court, Division Bench).
Core holding: Advocates acting as insolvency professionals must pay GST under the forward charge mechanism, not the reverse charge mechanism applicable to legal services.
Legal basis: Services of insolvency professionals are not covered by Notification No. 13/2017-Central Tax (Rate); therefore, Section 9(1) CGST Act (forward charge) applies.
No dual-role conflict: Advocates need not suspend BCI enrolment to act as insolvency professionals.
Compliance required: GST registration, GST-compliant invoicing, and return filing are mandatory for IP services.