2022 (8) TMI 1238 - AAR - GST

Government Insurance Services Exempt from GST Under Notification 12/2017 for Subscription-Based Death Benefit Program

Kerala SC ruled that GST does not apply to insurance services provided by a State Government Department (Kudumbasree) under a subscription-based death ... Exemption from GST - Agent - services provided under the scheme of Kudumbasree - services offered on MOU for a scheme to provide Subscription-based benefit for compensation in the event of death to the members of the Kudumbasree which is State Government Agency - Kudumbasree is a mission for poverty eradication and women empowerment of the Government of Kerala - compensation offered by the Department of Insurance of the Government of Kerala - applicability of N/N. 12/2017 Central Tax (Rate) dated 28-06-2017 - HELD THAT:- In the instant case, the service is provided by the applicant; a Department of the State Government, which is administering various insurance and other benefit schemes of the Government of Kerala. On perusal of the MoU entered by the applicant with Kudumbasree, it is seen that Kudumbasree is collecting the annual subscription and paying to the applicant along with all the necessary information regarding the beneficiary /members and nominee in the specified format and in the event of death of the insured member the benefit is transferred to the member through Kudumbasree. From the MoU it is evident that Kudumbasree is acting only as an agent for the collection of premium and disbursal of benefit to its members and the service is provided by the applicant to the members. Hence the recipient of the services provided by the applicant is the individual members of Kudumbasree and accordingly the services are covered by the exemption under SI.No.6 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 - thus GST is not applicable. Issues:Applicability of GST on services offered under an MOU for a subscription-based benefit for compensation in the event of death to the members of a State Government Agency.Analysis:The Kerala State Insurance Department sought an advance ruling on the GST applicability for services provided under an MOU to offer a 'Subscription-based benefit' for compensation in case of death to members of 'Kudumbasree,' a State Government Agency. The applicant clarified the similarity between CGST Act and KSGST Act provisions, highlighting the scheme details and the roles of Kudumbasree and the State Insurance Department.The jurisdictional officer did not provide any comments on the application, indicating no pending proceedings. During the personal hearing, the applicant reiterated their contentions and submitted additional supporting documents. The issue was examined under section 97(2) of the Act to determine the GST applicability on the insurance services provided under the MOU.The discussion focused on the exemption from GST for services provided by the Government, as per Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017. The entry at SI.No.6 of the notification exempts services by the Central Government, State Government, or local authority, except for specific exclusions. The ruling emphasized that services provided to business entities are excluded from this exemption.In this case, the service was provided by the State Government Department to individual members of Kudumbasree through an MOU. The MOU outlined the collection of subscriptions by Kudumbasree and the transfer of benefits to members in case of death. It was established that Kudumbasree acted as an agent for premium collection, and the services were provided by the State Department to the members, thus qualifying for the exemption under the notification.Therefore, the ruling concluded that GST is not applicable for the services offered under the MOU for the 'Subscription-based benefit' scheme to compensate members of Kudumbasree in case of death, as the applicant, being a State Government department, falls under the exemption provided in the Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017.