ase: Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors.
Court: Delhi High Court (Division Bench)
Citation: W.P.(C) 9410/2021
Coram: Justice Prathiba M. Singh and Justice Shail Jain
Date of Judgment: 13 August 2026
Category: GST – Forward Charge vs. Reverse Charge – Insolvency Professionals
Core Issue
Whether an Advocate enrolled with a Bar Council, while rendering services in the capacity of an Insolvency Professional under the Insolvency and Bankruptcy Code, 2016, continues to enjoy the reverse charge mechanism applicable to legal services provided by Advocates, or becomes liable to GST under the forward charge mechanism applicable to Insolvency Professionals.
Brief Facts
Kanwal Chaudhary, an Advocate registered with the Bar Council of Delhi since 1995, was registered as an Insolvency Professional on 27 July 2017. The NCLT, Delhi Bench appointed him as Interim Resolution Professional of Ireo Fiveriver Pvt. Ltd. in CP(IB) No. 408/2018.
A dispute subsequently arose regarding GST on his professional fees. The petitioner maintained that, being an Advocate, GST on the services rendered by him was payable by the recipient under the reverse charge mechanism. The NCLT sought clarification from the Insolvency and Bankruptcy Board of India.
By communication dated 9 March 2021, the IBBI held that “insolvency and receivership” services were not covered by the reverse charge mechanism and required the petitioner to submit GST-compliant invoices. The petitioner challenged this decision before the Delhi High Court.
Delhi High Court’s Findings
The Court distinguished between services rendered by a person as an Advocate and services rendered by the same person as an Insolvency Professional.
Under Notification No. 13/2017-Central Tax (Rate), as corrected by the corrigendum dated 25 September 2017, legal services supplied by an individual Advocate or firm of Advocates are governed by the reverse charge mechanism. However, this treatment applies to services rendered in the nature of legal services.
The Court observed that Insolvency Professionals constitute a distinct statutory class governed by the Insolvency and Bankruptcy Code, 2016 and the IBBI Regulations. Their duties and functions arise from the statutory framework of the IBC and are distinct from conventional legal services.
For GST classification purposes, “insolvency and receivership services” are specifically classified under Service Code 998241, separately from “legal services” falling under Heading 99821. Where a specific classification exists, it must prevail over a more general description.
Accordingly, the professional qualification or enrolment status of the individual providing the service is not determinative. What is relevant is the capacity in which the person acts and the nature of the service actually rendered.
Ratio Decidendi
An Advocate who acts as an Insolvency Professional renders services in the capacity of an Insolvency Professional and not in the capacity of an Advocate. Such services constitute specifically classified “insolvency and receivership services” and cannot be treated as legal services merely because the service provider is enrolled as an Advocate.
Since insolvency and receivership services are not covered by Notification No. 13/2017-Central Tax (Rate) prescribing reverse charge, the normal rule under Section 9(1) of the CGST Act applies. Consequently, GST on such services is payable by the Insolvency Professional under the forward charge mechanism.
The Court clarified that this conclusion does not disturb the GST treatment of legal services independently rendered by Advocates, which will continue to be governed by the reverse charge mechanism.
Final Verdict
The Delhi High Court upheld the legal position adopted by the IBBI in its communication dated 9 March 2021.
The Court held that:
Advocates acting as Insolvency Professionals are governed by the forward charge mechanism and are required to obtain GST registration and comply with the consequential requirements of the CGST Act, 2017.
The petitioner was accordingly directed to furnish GST-compliant invoices for the professional fees charged for services rendered as Interim Resolution Professional in CP(IB) No. 408/2018.
The Court expressly clarified that legal services rendered by Advocates in their capacity as Advocates will continue to be governed by the reverse charge mechanism.
Petition disposed of in these terms.
Key Takeaway
The GST mechanism follows the nature and capacity of the service rendered, not merely the professional qualification of the service provider. An Advocate wearing the statutory hat of an Insolvency Professional is liable to GST under forward charge for insolvency services, while the same Advocate’s legal services remain subject to reverse charge.