Delhi High Court: Advocates Acting as Insolvency Professionals Must Pay GST Under Forward Charge

The Delhi High Court has held that an advocate who takes up an assignment as an Insolvency Professional under the Insolvency and Bankruptcy Code, 2016 cannot treat the insolvency assignment as ordinary legal services for GST purposes. For services rendered in the capacity of an Insolvency Professional, the advocate is governed by the forward charge mechanism and must comply with the GST requirements applicable to Insolvency Professionals as a class.

The ruling came in Kanwal Chaudhary v. Insolvency and Bankruptcy Board of India & Ors., W.P.(C) 9410/2021. The judgment was reserved on July 9, 2026 and pronounced on August 13, 2026 by a Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain.

What the dispute was about

The petitioner, Kanwal Chaudhary, had been enrolled as an advocate with the Bar Council of Delhi since 1995 and was also registered as an Insolvency Professional from July 27, 2017. In December 2018, the NCLT Delhi Bench appointed him as Interim Resolution Professional in the corporate insolvency resolution process of Ireo Fiveriver Pvt. Ltd.

The dispute arose when professional fees for the insolvency assignment became payable. The petitioner took the position that because he was an advocate, his services should continue to fall under the GST reverse charge mechanism generally applicable to specified legal services. The IBBI, however, had taken the view in an order dated March 9, 2021 that insolvency and receivership services were not covered by that reverse-charge treatment and directed him to issue GST-compliant invoices.

High Court distinguishes legal services from insolvency services

The High Court upheld the IBBI's position. It concluded that the relevant question is not merely the professional background of the person providing the service, but the capacity in which the service is actually rendered. An advocate performing statutory functions as an Insolvency Professional under the IBC is providing insolvency-professional services, not legal services merely because the individual is also enrolled with a Bar Council.

The Court therefore held that advocates enrolled with the Bar Council who act as Insolvency Professionals are subject to forward charge for those insolvency assignments. They are required to obtain GST registration where applicable and comply with the consequential requirements of the CGST Act, 2017, the rules and the relevant notifications in the same manner as other Insolvency Professionals.

Reverse charge for legal practice remains unchanged

Importantly, the Court expressly limited its conclusion to services rendered in the capacity of an Insolvency Professional. It clarified that the ruling does not alter the GST mechanism applicable to legal services provided by the same person in the capacity of an advocate. Such legal services continue to be governed by the applicable reverse-charge framework.

This distinction is practically important for professionals who hold more than one professional qualification or registration. The GST treatment follows the nature and legal character of the specific service being supplied, rather than automatically following the supplier's primary profession.

What the Court directed in the case

The Court found that the IBBI's March 9, 2021 order reflected the correct legal position. It rejected the challenge to that order and directed the petitioner to furnish GST-compliant invoices for the professional fee charged for his services as Interim Resolution Professional in the relevant CIRP.

The ruling also records that the Bar Council of India had filed an affidavit before the Court and that the Court considered the statutory and regulatory framework governing both advocates and Insolvency Professionals before reaching its conclusion.

Practical implications for CAs, IPs and GST teams

For insolvency professionals and firms supporting CIRP assignments, the judgment reinforces the need to identify the capacity in which professional services are billed. An advocate-IP should not assume that the GST treatment for advocacy automatically carries over to an IBC assignment.

- Invoices for Insolvency Professional services should be structured in line with the forward-charge position confirmed by the Court.

- Professionals should separately classify legal-services engagements and insolvency assignments where both are undertaken by the same individual.

- GST registration, invoicing, tax payment and return-compliance implications should be reviewed for advocate-IPs who have treated insolvency fees differently in the past.

- Resolution Professionals, Committee of Creditors participants and finance teams processing insolvency-professional fees should ensure that invoices reflect the correct GST treatment.

Key takeaway

The Delhi High Court has drawn a clear functional line: when an advocate acts as an advocate, the applicable GST treatment for legal services continues; when the same person acts as an Insolvency Professional under the IBC, the insolvency service is subject to forward charge. Professionals handling insolvency assignments should review their invoicing and GST compliance accordingly and read the full judgment for case-specific application.