GST on Advocates Acting as Insolvency Professionals was examined by the Delhi High Court in Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors., where the Court clarified the applicable GST mechanism for services rendered by an Advocate in the capacity of an Insolvency Professional.
In Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors., the Delhi High Court held that an Advocate acting as an Insolvency Professional is governed by the forward-charge mechanism for GST on services rendered in that capacity, while ordinary legal services rendered as an Advocate continue to remain subject to the reverse-charge mechanism.
Introduction
The decision provides important guidance on GST on Advocates Acting as Insolvency Professionals and distinguishes such services from ordinary legal services rendered by Advocates.
The Delhi High Court has examined an important question concerning the intersection of GST law, the legal profession and insolvency practice: whether an Advocate who also functions as an Insolvency Professional should be treated as an Advocate for purposes of GST or as an Insolvency Professional rendering a distinct category of services.
In Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors., W.P.(C) 9410/2021, a Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain considered the applicability of the forward-charge and reverse-charge mechanisms to services rendered by an Advocate in the capacity of an Insolvency Professional. The judgment was pronounced on 13 August 2026 and is reported as 2026:DHC:6587-DB.
The Court ultimately held that the GST treatment depends upon the capacity in which the service is rendered and the nature of the service, rather than merely the underlying professional qualification of the individual.
Background of the Case
The petitioner, Kanwal Chaudhary, was an Advocate enrolled with the Bar Council of Delhi and had been practising since 1995. He subsequently qualified as an Insolvency Professional and was registered as such on 27 July 2017. He was appointed as the Interim Resolution Professional (IRP) of Ireo Fiveriver Pvt. Ltd. by the NCLT, Delhi Bench.
A dispute subsequently arose concerning the release of his professional fees as IRP. In the course of that dispute, the petitioner was required to furnish GST-compliant invoices.
The petitioner contended that GST, if payable, was liable to be discharged by the recipient under the reverse-charge mechanism, relying upon the GST treatment applicable to legal services provided by Advocates.
The issue was referred to the Insolvency and Bankruptcy Board of India (IBBI). By its order dated 9 March 2021, the IBBI took the view that “Insolvency and Receivership” services were not covered by the reverse-charge mechanism and directed the petitioner to furnish GST-compliant invoices.
The petitioner challenged this position before the Delhi High Court.
The Issue Before the Delhi High Court
The central question before the Court was whether an Advocate acting as an Insolvency Professional is governed by the:
- Forward-charge mechanism, under which the supplier is responsible for payment of GST; or
- Reverse-charge mechanism, applicable to specified categories of services including notified legal services provided by Advocates.
The Court approached the issue in three stages:
- GST treatment applicable to Advocates;
- GST treatment applicable to Insolvency Professionals; and
- GST treatment applicable when an Advocate acts in the capacity of an Insolvency Professional.
GST Treatment of Legal Services Provided by Advocates
The Court examined the statutory framework governing GST and the relevant notifications concerning legal services provided by Advocates.
It recognised that the reverse-charge mechanism applies to the specified legal services provided by an individual Advocate, senior Advocate or firm of Advocates.
However, the Court emphasised that the reverse-charge mechanism is linked to the nature of the notified service.
This distinction became central to the Court’s analysis.
Insolvency Services Constitute a Distinct Category
The Court examined the Scheme of Classification of Services under GST.
It noted that legal services are classified under the 99821 series, whereas “Insolvency and receivership services” are separately classified under 99824, with 998241 specifically covering insolvency and receivership services.
According to the Court, this classification demonstrates that insolvency and receivership services constitute a distinct category of service, separate from ordinary legal services.
The Court further applied the established principle that where a specific classification is available, the specific description is preferred over a general description.
Therefore, insolvency services cannot simply be treated as ordinary legal services merely because the person providing them happens to be an Advocate.
The Capacity in Which the Advocate Acts Is Decisive
This is the central reasoning of the judgment.
The Court held that when an Advocate renders services as an Insolvency Professional, the role in which the person is acting determines the nature of the service for GST classification.
The Court explained that the relevant consideration is the provision of “insolvency and receivership services”, rather than the professional qualification of the individual as an Advocate.
Consequently, services rendered by an Advocate while functioning as an Insolvency Professional fall under the specific classification of insolvency and receivership services.
The Court also emphasised that Insolvency Professionals constitute a distinct class governed by the Insolvency and Bankruptcy Code, 2016 and the IBBI regulatory framework. They cannot be treated differently merely because a particular Insolvency Professional happens to be an Advocate.
Advocates Act and IBC: Harmonious Interpretation
The petitioner had also raised a concern that treating insolvency services as distinct from legal services could have implications for an Advocate’s professional status.
The Court rejected this apprehension.
It noted that the IBBI Regulations themselves expressly recognise an Advocate enrolled with the Bar Council as a person eligible for registration as an Insolvency Professional.
The Court therefore held that the Advocates Act and the IBC should be interpreted harmoniously.
An Advocate may validly undertake the additional role of an Insolvency Professional. However, when rendering services in that capacity, the applicable regulatory framework is the IBC and IBBI Regulations.
The Court observed that this provides Advocates with another specialised area of professional activity without derogating from the Advocates Act.
Delhi High Court’s Finding on GST
After examining the statutory framework and service classification, the Court reached a clear conclusion.
The Court held that the reverse-charge mechanism applicable to Advocates providing legal services does not extend to services rendered by an Advocate in the capacity of an Insolvency Professional.
Instead, such services are governed by the forward-charge mechanism applicable to Insolvency Professionals as a class.
The Court’s reasoning can therefore be understood through the following distinction:
| Capacity in which service is rendered | Nature of service | GST mechanism |
|---|---|---|
| Advocate | Legal services | Reverse Charge |
| Insolvency Professional | Insolvency and receivership services | Forward Charge |
| Advocate acting as Insolvency Professional | Services rendered in the capacity of an IP | Forward Charge |
The Court was careful to clarify that this decision does not alter the GST mechanism applicable to ordinary legal services rendered by Advocates.
Final Directions of the Court
The Delhi High Court held that Advocates enrolled with a Bar Council who act as Insolvency Professionals:
- are governed by the forward-charge mechanism;
- are liable to obtain GST registration;
- must comply with the consequential requirements under the CGST Act, 2017, rules and notifications; and
- must comply with the applicable GST invoicing requirements.
In the petitioner’s case, the Court specifically directed him to furnish GST-compliant invoices for the professional fees charged for services rendered as an Interim Resolution Professional in CP(IB) No. 408/2018.
The writ petition was accordingly disposed of.
Key Takeaways
The judgment establishes several important points:
- An Advocate’s professional qualification alone does not determine GST classification.
- The capacity in which the service is rendered is relevant for determining its GST treatment.
- Insolvency and receivership services constitute a distinct category under the GST Scheme of Classification of Services.
- An Advocate acting as an Insolvency Professional is governed by the forward-charge mechanism for services rendered in that capacity.
- Ordinary legal services rendered by the same person in the capacity of an Advocate continue to remain governed by reverse charge.
- Advocates functioning as Insolvency Professionals must comply with the applicable GST registration, invoicing and other statutory requirements.
- The judgment clarifies the GST treatment of Advocates Acting as Insolvency Professionals when they render services in their capacity as Insolvency Professionals.
Conclusion
The Delhi High Court’s decision in Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors. provides an important clarification on the GST treatment of professionals who operate across the legal and insolvency domains.
The judgment does not create a general rule that all services provided by Advocates are subject to forward charge. Instead, its significance lies in the distinction between legal services rendered as an Advocate and insolvency and receivership services rendered as an Insolvency Professional.
By focusing on the nature and classification of the service and the capacity in which it is rendered, the Court has clarified that an Advocate functioning as an Insolvency Professional is to be treated, for GST purposes, in the same manner as other Insolvency Professionals.
The decision therefore provides useful guidance for Advocates undertaking insolvency assignments and for Insolvency Professionals dealing with GST registration, invoicing and compliance requirements.
Case at a Glance
Case: Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors.
Court: High Court of Delhi
Case No.: W.P.(C) 9410/2021
Citation: 2026:DHC:6587-DB
Judgment Date: 13 August 2026
Bench: Justice Prathiba M. Singh and Justice Shail Jain
Subject: GST; Insolvency Professionals; Advocates; Forward Charge; Reverse Charge
Result: Petition disposed of; IBBI’s position upheld.
Source: Judgment of the High Court of Delhi in Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors., W.P.(C) 9410/2021.
Disclaimer: This article is intended solely for general legal information and educational purposes. It does not constitute legal advice or create a lawyer-client relationship. Readers should refer to the original judgment and applicable law for authoritative guidance.
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Disclaimer
Disclaimer: This article is intended solely for general legal information and educational purposes. It does not constitute legal advice or create a lawyer-client relationship. Readers are advised to refer to the original judgment and applicable law for authoritative guidance.