2022 (6) TMI 253 - AAR - GST

Exemption form GST - Medical insurance premium taken to provide health Insurance to the employees, pensioners and their family members - Vehicle insurance Policy taken to provide Insurance to the vehicles owned by the Board - Eligibility of exemption as mentioned in Entry No. 3 of the Notification Number 12/2017 - Central Tax (Rate), dt 28th June, 2017 - HELD THAT - The applicant is procuring medical insurance services to their employees and their family members. Thus there is no direct relation between the insurance services procured by the applicant and the functions discharged by them under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017. Vehicle insurance policies procured by the applicant for the vehicles owned by the board qualify for exemption if they are directly used to provide services under Schedule XII of the Constitution. However if they are used for transportation of employees/board members/other persons they will not have direct relationship to functions discharged under Article 243W and therefore will not qualify for exemption under Notification No. 12/2017.

Summary

Issues:
1. Eligibility of medical insurance premium for exemption under Entry No. 3 of Notification Number 12/2017.
2. Eligibility of vehicle insurance policy for exemption under Entry No. 3 of Notification Number 12/2017.

Analysis:
1. The applicant, a governmental authority, sought clarification on the exemption of medical insurance premium under Entry No. 3 of Notification Number 12/2017. The authority examined the functions entrusted to a municipality under Article 243W of the Constitution of India. The exemption under Notification No. 12/2017 applies to pure services directly related to functions listed in the 12th schedule of the Constitution. Citing legal precedents, the authority determined that the medical insurance services procured by the applicant for employees and their families do not have a direct relation to the functions under Article 243W. Consequently, medical insurance premiums are not eligible for exemption.

2. Regarding the eligibility of vehicle insurance policies for exemption, the authority stated that if the vehicles are directly used to provide services under Schedule XII of the Constitution, they qualify for exemption. However, if the vehicles are used for transportation purposes without a direct relationship to functions under Article 243W, they do not qualify for exemption under Notification No. 12/2017. The ruling clarified that vehicle insurance policies are eligible for exemption only if directly used for services under the specified schedule.

In conclusion, the authority ruled that medical insurance premiums taken by the applicant are not eligible for exemption under Entry No. 3 of Notification Number 12/2017. On the other hand, vehicle insurance policies are eligible for exemption if directly used for services under Schedule XII of the Constitution, but not if used for transportation purposes unrelated to functions under Article 243W. The ruling provides a detailed analysis based on legal provisions and precedents to address the issues raised by the applicant comprehensively.