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 benefit MOU. The services qualify for exemption under Notification No. 12/2017 Central Tax (Rate), as the services were provided by a government entity to individual members and not to business entities.

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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.

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