2024 (10) TMI 282 - HC - GST

Challenge to N/N. 09/2023 and N/N. 56 issued under Section 168A of the Central Goods and Services Tax Act, 2017 - demand for the period 01 July 2017 to 25 July 2018 in respect of non-payment of IGST on reinsurance services - HELD THAT - Admittedly, the petitioner is stated to be a leading multinational insurance company which is also registered as a foreign reinsurance branch with the Insurance Regulatory and Development Authority of India IRDAI . It also holds a registration issued by the Ministry of Corporate Affairs, Government of India under the category of foreign companies. Entry 36A thus came to include Serial No. 40 specifically. The issue which therefore remained for consideration was whether the aforesaid amendments would be liable to be viewed as curative, and thus being applicable to the period prior to 27 July 2018, the date from which the said notification was stated to be applicable and whether the same would clarify the position which would obtain prior thereto - The GST Council as well as the Union Government, thus appear to have taken a conscious decision to regularize the period between 01 July 2017 and 26 July 2018. Undisputedly, the impugned order relates to that very period. While it is true that on 20 December 2023, when the impugned order came to be passed, these clarifications had not been rendered, undisputedly, the same would not sustain in light of the stand which has been taken by the respondents and is principally noticed. The impugned order dated 20 December 2023 is quashed - petition allowed.

Summary

Issues:
Challenge to Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018, excessive delegation in Notification No. 09/2023, quashing of Order-In-Original dated 20.12.2023, jurisdictional issue with Corrigendum dated 06.12.2023, clarification on Notification No. 02/2018 Central Tax (Rate) dated 25.01.2018, regularization of GST liability on reinsurance services.

Analysis:
The petitioner challenged Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018, seeking exemption from GST on reinsurance services related to government insurance schemes from 25.01.2018. The petitioner was aggrieved by the demand for non-payment of IGST on reinsurance services from 01 July 2017 to 25 July 2018. The petitioner, a multinational insurance company, had agreements with government companies for health insurance schemes under government initiatives.

The issue arose due to an amendment in Notification No. 12/2017 dated 28 June 2017, exempting reinsurance services related to government insurance schemes. An amendment on 25 January 2018 introduced Entry 36A, creating confusion by not including Serial No. 40. Subsequently, on 26 July 2018, Serial No. 40 was included in Entry 36A, clarifying the exemption for reinsurance services of government insurance schemes.

The matter was deliberated by the GST Council, which recommended regularizing GST payment on reinsurance services from 01 July 2017 to 26 July 2018. A clarificatory Circular was issued on 15 July 2024, confirming the regularization of GST liability on reinsurance of exempt insurance schemes for the said period. The Court upheld the petitioner's claim, quashing the impugned order dated 20 December 2023, and granting consequential reliefs in favor of the petitioner.