TaxTMI 
TaxTMI 
2024 (7) TMI 353
X X X X Extracts X X X X
X X X X Extracts X X X X
....ud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as an Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s. United India Insurance Company Limited, No. 24, United India Insurance, 1st Floor, Whites Road, Royapettah, Chennai - 600014 (hereinafter called as 'the Applicant') is engaged in the business of providing all kinds of general insurance including health. They are registered under the GST Acts with GSTIN: 33AAACU5552C1ZQ. 2. The applicant have preferred this application seeking Advance Ruling on the following: 2.1 Taxability Issue (1.1) Do es the health insurance services provided by the Applicant to Tamil Nadu State Government (TNSG) is exempted from GST under the Serial Number 40 of the No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rity shares held by Central Government and are engaged in the business of providing all kinds of general insurance including health. The applicant is providing a group health insurance policy to Tamil Nadu State Government (herein after referred to as "the Service Recipient"/"TNSG") covering the health of the individuals and the families of the TNSG Employees and their dependent relatives. The applicant submitted sample policy document as Annexure 1. 4.2 The applicant submits that earlier without noticing the exemption notification, they had collected and remitted GST on the premium amount from TNSG and attached the Invoice issued to the Service Recipient containing the value of the services and GST charged as Annexure 2. That the TNSG has brought to the attention of the applicant that since the entire premium is paid by the State Government, the service shall be exempt under Serial Number 40 of the Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and corresponding TNGST Notification. Specific Facts about the Insurance to TNSG- 4.3 The applicant stated that, the Policy is a health insurance policy of the employees (both retired and present) and also the rel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e scheme for which total premium is paid by the Central Government, State Government, Union territory. Nil Nil 5.2 The applicant submitted that in terms of the aforesaid exemption entry:- a. Any insurance schemes. b. Provided to State Government (among other Governments) c. Where total premium is paid by the State Government Is wholly and unconditionally exempt from GST. Meaning of Service Recipient 5.3. The Applicant submits that Section 2 (93) of the Act defines 'Recipient' as under:- (93) "recipient" of supply of goods or services or both, means- (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nion territory or local authority to individuals. 5.8. The Applicant thus submits that the above Circular clearly clarifies that Insurance to Government Employees, whether managed by Government itself or any other person (insurance company) providing the Insurance Services are exempt from GST. Reinsurance Exemption 5.9. The applicant further submits that they pay reinsurance premium to the Reinsurer and Sl.No. 36A of the Exemption Notification reads as follows: 36A Heading 9971 or Heading 9991 Services by way of reinsurance of the insurance schemes specified in serial number 35 or 36 or 40. Nil Nil 5.10. The applicant submits that in terms of the above SI. No. 36A, any re insurance services of the Insurance Scheme covered under Sl.No 40 is exempt from GST. That in the present case, as stated supra, the Insurance Services by the Applicant to the TNSG are exempt under Sl.No 40 of the Exemption Notification and accordingly, the reinsurance Services are also exempt from GST and consequently no RCM is also applicable wherever the Re-insurer is located outside India. Alternate Question-Valuation 5.11. The applicant further submits that without prejudice, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments." 5.15. The applicant further submitted that thus, both the consideration definition and the valuation provision exclude subsidy received from Central and State Government (State Government, in the present case). And in the given case, if the above supply provided by the applicant is held as taxable for whatever reason, since the entire money received from the TNSG, it would mean that the same is a subsidy received for covering the health of the employees of the State Government and consequently will be excluded from the valuation. 5.16. The applicant submitted that without prejudice to above contention, at best (from Department perspective) and at worst (from the Applicant perspective), it can be contended that entire....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, the reinsurance premium in this case, for instance, may be Rs. 800 and the GST thereon may be Rs. 144 (18% of Rs. 800). 5.21. The applicant further submitted that then the question is whether the Applicant is eligible to claim ITC on this Rs. 144 (in the above example), when the Value of the Taxable Supply is Zero (or Rs. 40, as the case may be) and the Output Tax Liability is Rs. Zero (Rs. 7.20, as the case maybe). 5.22. The applicant reproduced Section 17 (2) of the CGST Act which reads as follows:- "(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies." and submitted that this question arises only when the transaction is regarded as "Taxable" which automatically means that output transaction is not exempt from GST. 5.23. The applicant reproduced the definition of exempt supply as follows:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Government of Tamil Nadu (Employees) for NHIS Scheme. The taxpayer has charged tax at the rate of 18% from 2018-19 to 2022-2023 and reported in GSTR-1 in B2C column and paid taxes. • On oral enquiry with the taxpayers and further scrutiny of connected invoices for the year 2023-2024 for the NHIS scheme, they have raised invoice against 1).Commissioner of Treasuries and Accounts, Government of Tamil Nadu (Pensioners) and 2).Commissioner of Treasuries and Accounts, Government of Tamil Nadu (Employees) as Nil rate by quoting SI. No. 40 of CBIC Notification No. 12/2017-Central Tax(Rate),dt: 28.06.2017. • It is pertinent to note here that the taxpayer mentioned SI.No. 40 of the Notification No. 12/2017, dt: 28.06.2017 for their sudden claim of Exemption unlike the previous assessment years. • To understand the Sl. No. 40 of the Notification No 12/2017, we have to analyse the aforesaid entry along with current scenario of NHIS. In this NHIS Scheme The Treasuries and Accounts department has collected premium amount for NHIS Scheme from Employee/Pensioners of Government of Tamil Nadu and paid to the Insurance provider i.e., applica....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are the direct recipient of service of health insurance scheme from the supplier /applicant/Tvl. United India Insurance Company Limited. • In view of the above the applicant of this Advance Ruling cannot claim Exemption under SI. No. 40 of the Notification No 12/2017-Central Tax (Rate), dt. 28.06.2017 as well as cannot claim re insurance exemption under Sl. No. 36A as said notification. Moreover they have levied and collected GST for the same supply of service for NHIS at the rate 18% for the assessment years 2018-19, 2019-20, 2020-21, 2021-22, 2022-23 also. But for the assessment year 2023-24 they did not levy and collect 18 % GST for the same supply of service for the same NHIS and finally made revenue loss of Rs. 108 Crore approximately, at 18% of tax payable amount to the Commercial Taxes Department which cannot be accepted under the TNGST Act 2017. • At the outset the taxpayer /applicant/Tvl. United India Insurance Company Limited's claim of exemption for the service provided through NHIS scheme is totally liable to be rejected. • Further it is certified that there is no pendency of proceedings for adjudication on this subject in LTU....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es by way of reinsurance of the insurance schemes specified in serial number 35 or 36 Nil Nil From the above, answer of the Q. 1.2. is in affirmative. • Comment on Q.2.1. to Q.2.3 Since the reply of the Q.1.1 and Q.1.2. is in affirmative, hence no comments are offered in alternative question. • Comment on Q.3.1 & Q.3.2-Since the reply of the Q.1.1 and Q.1.2. is in affirmative, hence no comments are offered in alternative question. • Comment on Q.3.3 ITC may be restricted as per Section 16 & Section 17 of the CGST/TNGST Act, 2017, read with Section 20 of IGST Act, 2017 as made applicable in respect of nil/exempted. 7. Personal Hearing; The Applicant was given an opportunity to be heard in person on 10.01.2024. Shri. Shiva Kumar, Advocate and the Authorised Representative (AR), Shri. V.P. Ranganathan, Chief Manager, Shri. P. Jagaseeswar, Manager and Shri. Sachin Kumar, Assistant Manager of M/s. United India Insurance Company Ltd. appeared for the Personal hearing and the Authorised Representative reiterated the submissions made in their application. When the members enquired about the names of the specific insurance schemes for wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ication, has informed the applicant that it recovers some amount from the State Government employees ranging from Rs. 300 to 500 and the applicant is-not privy to the arrangement between Tamil Nadu State Government and their employees. Further that the applicant does not have any decision making authority on whether at all any recovery is to be made by Tamil Nadu State Government from their employees and quantum of such recovery and that there is no contractual relationship with Employees of the Tamil Nadu State Government and no payment flows from the Employees to the applicant. 8.3 With the above factual matrix, the applicant vide the present application seeks ruling as to whether their supply of service would be eligible for exemption under SI. No. 40 of Notn. No. 12/2017 Central Tax Rate dated 28.06.2017. The said entry of the Notn. No. 12/2017 Central Tax (Rate) is extracted for sake of convenience. Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 40 Heading 9971 or Heading 9991 Services provided to the Central Government, State Government, Union territory under any insurance scheme f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of law in which they referred to the provisions of recipient of supply of goods or services or both defined in clause (93) of section 2 of the CGST Act, 2017 which is extracted hereunder:- (93) "recipient" of supply of goods or services or both, means,- (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied; The clause (a) of the above definition stipulates that the recipient is the person who is liable to pay the consideration where a consideration is payable for the supply of goods or services or both. In the cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernment: These schemes should be exempted from GST because premium and service tax regarding this scheme is paid by the State Government. B. General Insurance Policy where premium and service tax is paid by Employee: The above said insurance policies are related to the welfare of employees of the State Government / Police personnel, employees of Electricity Department therefore, it is proposed that these insurance policies should be exempted from GST. C. General Insurance Policy where premium and service tax is paid by Students of Colleges/ private schools: These insurance policies are related to student safety and welfare. Therefore, it is proposed that the above said insurance policies should be exempted from GST. Services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory are exempt from GST. (Refer SI. No. 40 of Table in notification No. 12/2017-Central Tax(Rate)] Further, services provided by State Government by way of general insurance to employees of the State government/ Police personnel, employees of Electricity Departmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssue raised by tire applicant but it is to be recorded here that Government of Tamil Nadu is managing the insurance scheme called New Health Insurance Scheme and therefore, the recovery made by the Government from employees/ pensioner would also be exempt, in terms of entry 6 of Notification No. 12/2017-Central Tax (Rate) 8.10 Further with regard to the question 1.2- "If the Insurance services by the Applicant are held as exempted under Question 1.1 above, then consequently, is reinsurance of the health insurance policy also exempt in accordance with Serial No. 36A of the Notification 12/2017?", we find that the applicant submitted that in terms of IRDA norms, the Insurance company has to undertake re-insurance -i.e., insuring the insurer (i.e., the applicant, in this case) -wherein the applicant shall pay reinsurance premium to another insurer (referred to as 'Re-insurer'). That the Re-insurers are located both in India and outside India and if the Re-insurer are located outside India, the applicant promptly discharges GST liability under RCM for the services received and in case of domestic Re-insurers, receives tax invoice with applicable GST. That they avail ITC on t....