2022 (6) TMI 192 - AAR - GST

Insurance dispute resolution services by ombudsman officers constitute taxable supply under GST despite non-profit nature

In Re: M/s. Executive Council of Insurers

In Re: M/s. Executive Council of Insurers - TMI Issues Involved:1. Whether services provided by ECOI and 17 ombudsman officers are exempt from GST.2. Whether GST is applicable to Executive Council of Insurers (ECOI) and 17 Offices of Insurance Ombudsmen governed by the ECOI.3. Whether payment received by the Life Insurance Council and General Insurance Council on behalf of Executive Council are exempt from GST.4. Whether the amount received by the Executive Council of Insurers from the Life Insurance Council and General Insurance Council is exempt from GST.Issue-wise Detailed Analysis:Issue 1: Whether services provided by ECOI and 17 ombudsman officers are exempt from GST.- The applicant, a quasi-judicial authority, facilitates the functioning of Insurance Ombudsmen in India and does not charge fees from complainants.- The applicant argued that the services are rendered on a 'No profit & No Loss basis' and are not in furtherance of business.- The jurisdictional officer contended that the applicant's activities fall under the scope of 'supply' as defined in Section 7(1) of the CGST Act, which includes all forms of supply of goods or services made for consideration in the course or furtherance of business.- The Authority for Advance Ruling (AAR) found that the applicant's activities qualify as 'supply of services' since they resolve disputes between aggrieved persons and insurers.- The funds received from Life Insurance and General Insurance Councils are considered 'consideration' under Section 2(31) of the CGST Act.- The applicant's activities are deemed to be in furtherance of business as defined under Section 2(17) of the CGST Act.- Conclusion: The services provided by ECOI and 17 ombudsman officers are not exempt from GST.Issue 2: Whether GST is applicable to Executive Council of Insurers (ECOI) and 17 Offices of Insurance Ombudsmen governed by the ECOI.- The applicant's services are considered a 'supply of services' under the GST Act.- The funds received from insurance councils are deemed 'consideration' for these services.- The applicant's activities fall under the definition of 'business' as per Section 2(17) of the CGST Act.- Conclusion: GST is applicable to the Executive Council of Insurers (ECOI) and the 17 Offices of Insurance Ombudsmen governed by the ECOI.Issue 3: Whether payment received by the Life Insurance Council and General Insurance Council on behalf of Executive Council are exempt from GST.- The AAR noted that the payments are not received by the Life Insurance and General Insurance Councils on behalf of the applicant but are paid to the applicant on behalf of the insurance companies.- This question does not fall under the purview of Section 97 of the CGST Act, and hence, was not answered.- Conclusion: Not answered.Issue 4: Whether the amount received by the Executive Council of Insurers from the Life Insurance Council and General Insurance Council is exempt from GST.- The AAR observed that the amounts received by the applicant from the Life Insurance and General Insurance Councils are not exempt under Notification No. 12/2017-CTR dated 28.06.2017.- The services provided by the applicant do not specifically find mention in the said notification.- Conclusion: The amount received by the Executive Council of Insurers from the Life Insurance Council and General Insurance Council is not exempt from GST.Order:- Question 1: The services provided by ECOI and 17 ombudsman officers are not exempt from GST.- Question 2: GST is applicable to the Executive Council of Insurers (ECOI) and 17 Offices of Insurance Ombudsmen governed by the ECOI.- Question 3: Not answered in view of the discussions made above.- Question 4: The amount received by the Executive Council of Insurers from the Life Insurance Council and General Insurance Council is not exempt from GST.