TaxTMI 
TaxTMI 
2026 (9) TMI 1648
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ministers, the Leader of the Opposition, the Speaker, the Deputy Speaker and Chairpersons of Financial Committees. The aforesaid category of beneficiaries is described as 'Clause A' beneficiaries in the draft Memorandum of Understanding (MoU) referred to herein below. 1.3 The Government of Kerala sanctioned MEDISEP Phase-II vide G.O. (P) No. 5/2026/FIN dated 20.01.2026 issued by the Finance (Health Insurance) Department. As per the said Government Order, the scheme is to be implemented for a period of two years commencing from 01.02.2026 to 31.01.2028, and enrolment under the scheme is compulsory for all eligible employees and pensioners. The Government Order fixes the annual premium at Rs. 8,244/- per Beneficiary Family Unit (Rs. 687/- per month) for the first policy year, exclusive of GST. It is also recorded therein that, in the event this Authority does not hold the services to be exempt, GST shall become payable in addition to the premium. 1.4 The Applicant and the Government of Kerala, represented by the Secretary (Finance-Resources), Finance Department, on behalf of the Governor of Kerala, have placed on record an Insurance Contract/Memorandum of Understanding....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... way of health insurance under MEDISEP Phase-II, in respect of the beneficiaries specified under Clause A of the draft MoU, are covered under SI. No. 40 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and are therefore exempt from GST, when the entire premium is paid by the Government of Kerala? Question No. 2: Whether the annual premium of Rs. 8,244/- per Beneficiary Family Unit, proposed to be received by the Applicant from the Government of Kerala under MEDISEP Phase-II, in respect of the beneficiaries specified under Clause A of the draft MoU, is not liable to GST in terms of the said Notification? 2. Contentions of the Applicant 2.1 The Applicant submits that SI. No. 40 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts services provided under any insurance scheme where the entire premium is paid by the Central Government, State Government or Union territory. According to the Applicant, the said entry prescribes only two conditions, namely, that there should be an insurance scheme and that the entire premium should be paid by the Central Government, State Government or Union territory. It is submitted that both the aforesaid ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the course of the hearing, he submitted that SI. No. 40 of Notification No. 12/2017-Central Tax (Rate) prescribes only two conditions for claiming exemption and that both stand fulfilled in the present case. He further submitted that, in terms of Section 2(93) of the CGST Act, 2017, the Government of Kerala is the recipient of the insurance service since it alone pays the entire premium. It was also contended that the expression "under any insurance scheme" is of wide amplitude and is not restricted to insurance schemes relating to Government property. The authorised representative further submitted that the object of the exemption is to prevent GST from reducing public funds spent on the welfare of the beneficiaries and that a strict interpretation of the exemption notification does not permit reading into the notification a condition requiring the Government itself to be the insured person. No additional documents were produced during the course of the personal hearing. Subsequently, a document containing the Applicant's written submissions was submitted. 5. Analysis and Discussion 5.1 We have carefully examined the application filed by the Applicant, the annexures and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The Insurance Contract/MoU shows that the contract for implementation of the Scheme is proposed to be entered into / has been drawn up between the Governor of Kerala, represented by the Secretary (Finance-Resources), Finance Department, Government of Kerala and the Applicant. The said document further indicates that- a) in respect of the beneficiaries specified under Clause A, the entire premium payable to the Applicant is payable solely by the Government of Kerala; b) Clauses 10.1.1 and 10.1.2 provide that, in respect of beneficiaries covered under Clause A, the annual premium of Rs.8,244/- per Beneficiary Family Unit shall be paid by the Government of Kerala to the Applicant and the Government has undertaken to discharge the entire premium liability payable to the Applicant in respect of such beneficiaries; c) the Applicant has also stated that no premium is collected by it directly from the employees, pensioners or other eligible beneficiaries covered under Clause A; d) the Insurance Contract/MoU simultaneously provides a separate mechanism in respect of Clause B beneficiaries, namely employees and pensioners of Public Sector Undertakings, Boa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 15.11.2017 issued by the Central Board of Indirect Taxes and Customs under Section 168 of the CGST Act. The relevant clarification is reproduced below: SI.No. Issue Clarification 3. Whether GST is leviable on General Insurance policies provided by a State Government where the premium is paid by the State Government or by the employees/students etc .? Services provided to the Central Government, State Government or Union Territory under any insurance scheme for which the total premium is paid by the Government are exempt under SI. No. 40 of Notification No. 12/2017-Central Tax (Rate). 5.8 The above clarification directly addresses insurance schemes formulated by the Government for employees or other identified beneficiaries. It clearly distinguishes between cases where the premium is borne by the Government and those where the premium is borne by the individual beneficiaries. The Circular clarifies that exemption under SI. No. 40 is available where the entire premium is paid by the Government. Thus, the clarification supports the view that the identity of the insured persons is not the determining factor for claiming exemption; what is material is that the....