2025 (5) TMI 1185 - HC - GST

Insurance Company Challenges GST Demand Citing Procedural Irregularities and Jurisdictional Complexities in Tax Assessment

DHC in W.P.(C) 5002/2025 addressed a GST demand dispute involving an insurance company. The court restrained coercive action against the petitioner due to ... Extension of time limit of issuance of SCN u/s 73 / 74 - Demand for GST along with penalties - non-payment of outward GST liability on sale/supply of salvage/wreck claims in claims settled by the insurance companies - Challenged the impugned order - HELD THAT:- Mr. Tarun Gulati, ld. Sr. Counsel for the Petitioner, relies upon the circular dated 26th January, 2024 issued by Central Board of Indirect Taxes and Customs (‘CBIC’). Ld. Sr. Counsel also submits that there are two other glaring issues in this case. Firstly, that the summary orders uploaded by the Respondent No. 4/Department have erroneously converted the demand to Rs. 144 crores instead of Rs. 7.21 crores. Secondly, it is submitted that the demand relates to 20 States and there is also a State GST component in each of the States. The impugned orders prescribe that a common appeal can be filed in respect of the entire demand. However, there is no clarity as to how in respect of the GST of 20 states, a common appellate authority can adjudicate the issue. On both these issues, let Mr. Akshay Amritanshu, ld. Senior Standing Counsel for Respondent-CBIC, seek instructions. Since the demand itself has been erroneously uploaded, no coercive steps shall be taken against the Petitioner till the next date. If any rectification orders have to be passed by the Departments concerned, they may do so by the next date of hearing. The Delhi High Court, in W.P.(C) 5002/2025, heard a petition filed by Zurich Kotak General Insurance Company challenging the impugned order dated 28 January 2025 and summary orders dated 1 February 2025 by the Commissioner and Additional Commissioner of Central Tax (Delhi West), which raised a GST demand of approximately Rs. 7.21 crores along with penalties. The dispute centers on whether GST is payable on the salvage/wreckage value deducted from insurance claim settlements.The Petitioner relied on the CBIC circular dated 26 January 2024 and highlighted two critical issues: (i) the summary orders erroneously reflected a demand of Rs. 144 crores instead of Rs. 7.21 crores, and (ii) the demand involves GST components from 20 States, raising questions about the jurisdiction of a common appellate authority.The Court noted the lack of clarity regarding adjudication of GST demands spanning multiple States and directed the Respondent-CBIC's counsel to seek instructions. Pending rectification of the erroneous demand upload, the Court restrained coercive action against the Petitioner. The matter was adjourned to 10 July 2025.Key holding: 'Since the demand itself has been erroneously uploaded, no coercive steps shall be taken against the Petitioner till the next date.'