Reinsurance GST liability regularised by later circular, leading to quashing of earlier demand orders

GST liability on reinsurance services for the period from 01.07.2017 to 24.01.2018 was regularised by a later circular issued on 15.07.2024 on an "as is where is" basis. The Delhi HC held that the circular applied to the petitioner because the impugned adjudication and appellate orders were passed before the clarification and did not consider it. The earlier demand orders therefore could not be sustained, and the order-in-original and order-in-appeal were set aside, granting the petitioner the benefit of the circular.

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Issues: Whether GST liability on reinsurance services availed for the period from 01.07.2017 to 24.01.2018 stood regularized by the subsequent circular and whether the impugned orders could be sustained.

Analysis: The dispute concerned reinsurance services relating to insurance schemes covered by serial nos. 35 and 36 of Notification No. 12/2017-CT(R) dated 28.06.2017. A later circular issued on 15.07.2024, based on the GST Council's recommendation, regularized the GST liability for the relevant period on an 'as is where is' basis. Since the impugned adjudication and appellate orders were passed before issuance of the circular, they did not consider the later clarification. The circular was held to be applicable to the petitioner, and the earlier coordinate bench view was followed.

Conclusion: The subsequent circular applied to the disputed period, and the demand orders could not be sustained. The impugned order-in-original and order-in-appeal were set aside, and the petitioner was granted the benefit of the circular.

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