TaxTMI 
TaxTMI 
2026 (1) TMI 502
X X X X Extracts X X X X
X X X X Extracts X X X X
....chandran, Smt. Akshaya Thomas, Sri. George Cherian (Sr.) For R6., By Advs. Smt. M. Santhy, Shri. V. Girishkumar, SC, Central Board Of Indirect, Taxes And Customs, Smt. Latha Anand, Sri. Geoofe A. Cherian, Smt. Anna Rose Nambadan, Sri. S. Vishnu (Arikkattil), Smt. Vidya Gangadharan, Shri. Thomas Glaison, Shri. Sunil Shanker, Smt. Girija L., CGC, Sri. C. Ajith Kumar, Smt. Varsha S.S., Smt. Rosanna C. Wilson, Sri. P.T. Dinesh, Senior Standing Counsel for CGST, Dr. Pauly Mathew Muricken, Shri. H. Ramanan, Shri. Asvino Sheej. S, Shri. Alan Philip Alex, Smt. Arathi Prabhakaran. JUDGMENT In all these cases, the petitioners are retired employees of various banks and the members of group health insurance policies issued by the National Insurance Company Limited. The common issue involved in these writ petitions is regarding the question as to whether the petitioners are entitled to the exemption from payment of GST for the premium paid by them towards group insurance policy in the light of the notification published by the Government as per G.S.R. 666(E) dated 17.9.2025 based on the recommendations of the GST Council, by which, certain exemptions were contemplated for health insurance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rious statutory provisions and the regulations/circulars issued by the IRDAI (Insurance Regulatory and Development Authority of India). 3. I have heard Sri. Renjith Thampan, the learned Senior Counsel, Sri. R. Lekshmi Narayanan, the learned Senior Counsel and Sri. V.K. Prasad, the learned counsel appearing for the petitioners, Sri. George A. Cheriyan (Thiruvalla), learned Senior counsel appearing for the Insurance Company, Sri. P.T. Dinesh, Sri. P.R. Sreejith and Sri. V. Gireesh Kumar, the learned Senior Standing Counsel for the CGST. 4. The main objections raised by the respondents against the claim made by the petitioners seeking exemption is that, going by the recommendations of the GST Council in its 56th meeting, based on which the exemption was granted, as regards the health insurance policies, the exemption of GST was contemplated only in respect of individual health insurance policies, including family floater policies and policies for senior citizens, and the same was never intended to be extended to the group insurance policies. The respondents highlighted this aspect, by specifically bringing the attention of this Court to the relevant clauses in the notification, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shall be issued by any insurer, wherein, group is formed with the main purpose of availing itself of insurance. There shall be a clearly evident relationship as specified by the Authority from time to time between the members of the group and the group policy holder. Thus, it was contended that these writ petitions are to be dismissed. 8. I have carefully gone through the records and examined the contentions raised by both sides. Before moving into the consideration of issues arising in these case, it is necessary to examine the relevant clauses in the notifications issued by the Government as well as the other authorities. As mentioned above, G.S.R.666(E) dated 17.9.2025 is the notification issued by the Central Government based on the recommendations of the GST Council. Clause 36D of the same reads as follows: "36D Heading 9971 Service of health insurance business provided by an insurer to the insured, where the insured is not a group [Please refer to clause (zfb) in para 2] Explanation: For the removal of doubts, it is hereby clarified that: a. This exemption shall apply to a contract of insurance where the insured is an individual, or an individual and f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which going by Ext.P1, is intended to be made applicable to the individual health insurance policies alone. The said fact is made clear in clause 36D as well, where, it is specifically mentioned that, the exemption is provided to the services of health insurance business provided by the insurer to the insured, where, the insured is not a group. Apart from the above, the said clause contained an "Explanation" which states that, "for the removal of doubts, it is hereby clarified that this exemption shall apply to a contract of insurance where the insured is an individual, or an individual and family of the said individual". Thus the fact that, it is applicable to the individual policies alone, is reiterated in the explanation contemplated therein. 10. It is the specific case of the respondents that the policies which are the subject matter in these writ petitions, were issued as group medical insurance policies, based on the negotiation made by the Indian Banks' Association with the General Insurance Companies. Exhibit P3 issued by the Indian Banks' Association indicates the procedure followed by the said Association, while causing the policy to be issued by the insurer. It is dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the main purpose of availing itself of an insurance. Thus, the fact that, the policy was issued to a large number of persons extending to more than 1.5 lakhs persons by a general insurance company bound by the regulation issued by the IRDAI, itself indicates that the said policy was issued in terms of the relevant regulations. As mentioned above, the regulation contains a clause prohibiting forming a group, exclusively for the purpose of availing insurance coverage and there must be some relationship between the members of the group and the group policyholder. Therefore, the issuance of policy by following the regulations of IRDAI itself would indicate that the said policy was issued to a group, where, there is an evident relationship between the members of the group and the policyholder. 12. Apart from the above, I find merits in the contentions raised by the respondents that the policies which are relevant in these cases are obtained by the Indian Banks' Association through collective bargaining. The benefits of the said collective bargaining are clearly explained in the counter affidavit of the 2nd respondent in WP(C) No. 38436/2025. In paragraph 20 thereof reads as follows: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....#39;, as mentioned in Ext.P2, even though similar to the definition of 'group' as contained in the IRDAI regulation, there is a subtle difference between the two. It was pointed out that, in the definition of 'group' as contained in IRDAI regulation, the group consists of persons who joined together with a commonality of purpose or engaging in a common activity, whereas in Ext.P2 notification, the 'group' is a group of persons who joined together with a commonality of purpose or for engaging in a common activity "other than availing insurance". Thus, according to the petitioners the specific inclusion of the words "other than availing insurance" is very important and by virtue of inclusion of the said clause in the definition of 'group' in Ext.P2, the groups, which are formed together only for the purpose of availing the benefit of insurance should be exempted. While considering the said contention, it is to be noted that, going by the Regulations of the IRDAI, there is no policy contemplated for a group which is formed for the sole purpose of availing the insurance and there must be a relationship between the members of the group and the policy hold....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ued in favour of the tax payers. However, the question to be considered in these cases, is not in relation to the interpretation of the provision in the taxation statute which deals with the imposition of tax, but on the other hand, the interpretation is that of the relevant clause in a statutory notification intended for an exemption contemplated under the Act from the obligation to pay the tax. When it comes to the exemption from tax, the settled position of law is that, when there is doubt as to the interpretation, the benefit of the same should go to the State. Of course, the learned Senior Counsel Sri. R. Lekshmi Narayanan, appearing for Indian Banks Association, relied on the observations made in Commissioner of Customs (Preventive) and Subhas Chandra Bose (supra) where it was observed that, the rule regarding exemptions is that, the exemptions should generally be strictly interpreted, but beneficial exemptions having their purpose as encouragement or promotion of certain activities, should be liberally interpreted. However, the question of strict interpretation does not arise in this case, as going by the stipulations contained in Ext.P2 particularly clause 36D thereof, ther....