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TMI Blog2022 (6) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... r. This is nothing but services rendered to the said person/persons and therefore can be considered as supply as defined under the GST provisions. In this case, it is observed, that applicant is rendering services to the aggrieved persons who have grievances against insurance companies/insurers. The said service is provided by way of by resolving the disputes of the said aggrieved persons with insurance companies. In fact, it is found that the Insurers, being the persons against whom there is a grievance, are also interested in solving the relevant issues and in this context, it is seen that by deciding on the complaints of the aggrieved persons, the insurance company being party to such disputes are also availing the services of the applicant/Ombudsman. Hence, the impugned activity undertaken by the applicant amounts to 'supply of services'. Whether there is consideration involved in the impugned transaction i.e. whether the applicant is receiving any consideration for the services rendered and from whom? - HELD THAT:- Even though the aggrieved persons do not pay any fees to the applicant, and the amounts are received from Life Insurance and General Insurance Counc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 97 of the CGST Act, 2017 and is therefore not answered. Whether the amount received by Executive Council of Insurers from the Life Insurance Council and General Insurance Council are also exempt from GST? - HELD THAT:- It is already held that the concerned amounts paid by the Life Insurance Council and General Insurance Council to the applicant are taxable and not exempt. - GST-ARA-77/2020-21/B-73 - - - Dated:- 31-5-2022 - SHRI. RAJIV MAGOO, AND SHRI. T. R. RAMNANI, MEMBER NO.GST-ARA-77/2020-21/B-73 Mumbai, dt.31.05.2022 PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. Executive Council of Insurers , the applicant, seeking an advance ruling in respect of the following questions. 1. Whether services provided by ECOI and 17 ombudsman officers are exempt from GST? 2. Whether GST is applicable to Executive Council of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived conform to the guidelines of Insurance Ombudsman Rules, 2017. Written submissions dated 19.04.2022:- 2.5 Applicant has its origin in Section 114 in The Insurance Act, 1938 and came into existence through Redressal of Public Grievance rules, 1998 framed by the Central Government notified in gazette vide GST 670(E) on 11/11/1998. The Government in suppression of Redressal of Public Grievance rules 1998 came out with Insurance Ombudsman Rules, 2017 and as per these rules, Governing Body of insurance Council (GBIC) was redefined as the 'Executive Council of Insurers' (ECOI). The said rules were further amended on 02.03.2021 and ECOI has been redefined as 'Council for Insurance Ombudsmen' w.e.f. 02/03/2021 Purpose and Analysis of Procedural part: 2.5 The Insurance Ombudsman scheme was created by the Govt of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way. The complaint to the Ombudsman can be about: (a) Delay in settlement of claims, beyond the time specified in the regulations framed under the IRDAI Act, 1999; (b) Any partial or total re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e companies can be said to be consideration. Further, Clause 5 of the Guidelines dated 15/02/2021 specifically states that CIO (erstwhile ECOI) will refund the amount received in excess from Life Insurance Council and General Insurance Council or will recover in case of shortage from them by single remittance after comparing both the amounts that were received in advance in the beginning of the Financial year actual expenses at the end of the financial year. (iii) Without prejudice it is stated that the amount received by the applicant is totally based on administrative decision as per Rule 12, especially sub rules 2 and 3. It is not a case that the charges recovered are based on complaints attended. The officer in his submissions has erred to conclude that reimbursements of administrative expenses received as per Rule 12 are 'Consideration'. It is clear that one of the important facets being missing, the supply by the applicant fails the touch stone of being supply as per GST law as explained in the Flyer. (iv) The officer has concluded that Clause (a) of the definition defines business whether or not for a pecuniary benefit. Hence supply of services by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir day to day expenses including salaries and office maintenance are met through the funds received from the 58 insurers which are received through 'Life insurance Council' and General Insurance council 3.3 To determine taxability reference is made to Section 7(1) of CGST Act which specifies scope of supply it is to be seen whether activity of the applicant falls within the ambit of scope of supply. 3.4 Section 7(1) of CGST Act which deals with scope of supply reads as follow (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business ; (b), (c) From subsection 1 (a) of above provision, it is seen that the scope of supply mainly depends on: 1) Whether the activity undertaken is supply of goods or service 2) Whether the activity is made or agreed to be made for a consideration 3) And whether the said activity is in the course or furtherance of business. 3.6 Activity undertaken by the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they do not carry out any commercial activity or business and do not have any income of its own. Their services are rendered on a 'No profit No Loss basis. To check whether the activity of the applicant is business or not we will have to refer to definition of business as per subsection 17 of section 2 of CGST Act which is as below 17) business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) (e), (f), (g) ..; 3.11 Clause (a) of the above definitions defines business whether or not for a pecuniary benefit. Hence supply of services by the applicant even it is for 'No profit Or No Loss' basis, is squarely covered under the definition of the business. 3.12 From the above discussions and relevant provisions of the law it is clear that activity undertaken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer. This is nothing but services rendered to the said person/persons and therefore can be considered as supply as defined under the GST provisions. 5.6 Further, as per section 2 (102) of CGST Act, services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. In the subject case we observe that applicant is rendering services to the aggrieved persons who have grievances against insurance companies/insurers. The said service is provided by way of by resolving the disputes of the said aggrieved persons with insurance companies. In fact, we find that the Insurers, being the persons against whom there is a grievance, are also interested in solving the relevant issues and in this context, it is seen that by deciding on the complaints of the aggrieved persons, the insurance company being party to such disputes are also availing the services of the applicant/Ombudsman. Hence, we are of the view that the impugned activity undertaken by the applicant am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss' which is as under:- As per section 2 (17) of CGST Act, the term business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d), (e), (f), (g) ; 5.10 The term business covers the mentioned or similar activities whether or not it is for a pecuniary benefit. In the subject case the activity undertaken by the applicant is covered under the definition of 'business', since the meaning of 'business' is very wide and enlarged due to the inclusive nature of the definition. Hence, the impugned activity undertaken by the applicant is a supply of services and the amounts received by the applicant from the Life Insurance and General Insurance Councils are not exempt from GST. 5.11 Finally, Notification No. 12/2017-CTR dated 28.06.2017 exempts the intra-State supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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