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of <h1>Recovery of Insurance Premiums from Employees Not Liable for GST</h1> <h3>In Re: M/s. The Tata Power Company Limited</h3> In Re: M/s. The Tata Power Company Limited - 2022 (57) G.S.T.L. 141 (A. A. R. - GST - Mah.) Issues Involved:1. Whether the recovery of an amount towards Top-up and parental insurance premium from the employees amounts to a supply of any service under Section 7 of the Central Goods & Service Tax Act, 2017.Issue-wise Detailed Analysis:1. Recovery of Insurance Premium and Supply of Service:The applicant, engaged in power generation, transmission, and distribution, provides additional insurance options to its employees under a 'Health & Wellness Policy'. Employees can opt for Top-up Insurance and Parental Insurance, with the premium recovered from their salaries. The applicant contends that this recovery does not constitute a supply of service under Section 7 of the CGST Act, as the applicant is not in the business of providing insurance services and the provision of such insurance is not mandatory under any law.2. Definition and Scope of 'Supply':Section 7 of the CGST Act defines 'supply' to include all forms of supply of goods or services for a consideration by a person in the course or furtherance of business. The applicant argues that their activity does not meet this definition as it is not in the course or furtherance of their primary business of power generation.3. Related Persons and Business Definition:The applicant highlights that employer and employee are deemed 'related persons' under the CGST Act. However, services provided by an employee to the employer are not considered supply. The applicant asserts that their activity does not fall under the definition of 'business' as provided in Section 2(17) of the CGST Act, which includes trade, commerce, and activities incidental or ancillary to these.4. Jurisdictional Officer’s Contention:The jurisdictional officer submits that the provision of insurance services to employees appears to be in the course of furtherance of business, thus meeting the conditions specified in Section 7 of the CGST Act, making the transactions treatable as 'Supplies'.5. Authority’s Findings:The Authority examined the facts, documents, and submissions. They noted that the applicant pays the insurance premium to the insurance company and recovers it from employees, without availing input tax credit on the GST charged by the insurance company. The Authority found that the applicant is not in the business of providing insurance services and that the recovery of premiums is not mandatory under any law, thus not affecting the applicant's business.6. Precedents and Similar Rulings:The Authority referred to previous rulings, including POSCO India Pune Processing Center Private Limited and Jotun India Private Limited, where similar facts led to the conclusion that recovery of insurance premiums from employees does not constitute a supply of service.Conclusion:The Authority concluded that the recovery of Top-up and Parental Insurance premiums from employees does not amount to a supply of service under Section 7 of the CGST Act. Consequently, the applicant is not liable to discharge GST on the recovered amounts.Order:The question of whether the recovery of an amount towards Top-up and parental insurance premium from the employees amounts to a supply of any service under Section 7 of the Central Goods & Service Tax Act, 2017, is answered in the negative.
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