Kerala HC issued notice to Govt. in writ challenging GST on goods and services provided by Association to its members

The Kerala High Court Advocates' Association has filed a petition challenging the Goods and Services Tax (GST) imposed on goods and services it provides to its lawyer members. The association argues that its activities, such as providing facilities and managing a building for its members, fall under the 'doctrine of mutuality', meaning there is no taxable supply as the services are exchanged among members themselves. The High Court has acknowledged a prima facie case and issued a notice to the government seeking their response.

In Kerala High Court Advocates' Association and Ors. v. The Assistant Commissioner SGST, Ernakulam [W.P. (C) No. 20304 of 2021 dated September 23, 2021], Kerala High Court Advocates' Association ("the Petitioner") filed a Writ Petition challenging GST on goods and services provided by the Petitioner to its own members.

The Members of the Petitioner Association are Advocates enrolled on the rolls maintained by the Bar Council of India ordinarily practicing in the Honorable High Court of Kerala. The Petitioner Association had been acting as an agent for its members in the matter of distribution of various essential items to its own members and for providing various essential facilities to its own members.

The Petitioner constructed a building for the chamber complex of lawyers’ and they have been occupied by members only, this venture was done long before the coming into force of the Central Goods and Services Tax Act, 2017 ("CGST Act") as well as Kerala State Goods and Services Tax Act, 2017 ("KGST Act").

The building was named as KHCAA Golden Jubilee Chamber Complex. A portion of the complex is used as a canteen for members, organic shop for members, given on a licensed basis. Banks run by outside agencies for the convenience and service of the Members of the Association also occupy a small portion of the Complex on a license basis. The income derived from the licensed premises is also used for the benefit of the members only. Hence the said income is not liable to be taxed under the CGST/KGST Acts as the proceeds therefrom are used for the benefits of the welfare of the members.

The primary contention of the Petitioner was that such a levy of GST would attract the ‘doctrine of mutuality’ as there could be no supply of goods from it to its members. Furthermore, the Petitioners argued that from the legal and factual perspective the Petitioner is a lawyers’ combination for assisting themselves in exclusively conducting cases before the Honorable High Court of Kerala. It cannot be termed as a taxable entity under the CGST/ KSGST Act.

After taking cognizance of all the facts and evidences, the Honorable Kerala High Court observed that Petitioners made out a prima facie case, which merits admission and on the basis of this observation the Court issued a Notice to the State Government on the plea of the Petitioner challenging the GST levied on the goods and services provided to its own members.