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TMI Blog2024 (7) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... State Government/ Police Personnel, employees of electricity department or students. While the former fall under SI. No. 40 and the latter under Sl. No. 6 of the Notification No. 12 /2017-Central Tax (Rate) - In the case of applicant, the supply of insurance is made only to the Government of Tamil Nadu for which total premium is paid by the Government and therefore it would be eligible for exemption under SI. No. 40 of the Notification No. 12/2017-Central Tax (Rate). It may be not relevant to the issue raised by tire applicant but it is to be recorded here that Government of Tamil Nadu is managing the insurance scheme called New Health Insurance Scheme and therefore, the recovery made by the Government from employees/ pensioner would also be exempt, in terms of entry 6 of Notification No. 12/2017-Central Tax (Rate). Exemption status of reinsurance of the health insurance policy - HELD THAT:- The supply of goods or services is not being undertaken or proposed to be undertaken by the applicant as the applicant is the recipient of reinsurance service and the supply is being undertaken or proposed to be undertaken by the suppliers of reinsurance service providers, located in India - w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. M/s. United India Insurance Company Limited, No. 24, United India Insurance, 1st Floor, Whites Road, Royapettah, Chennai - 600014 (hereinafter called as 'the Applicant') is engaged in the business of providing all kinds of general insurance including health. They are registered under the GST Acts with GSTIN: 33AAACU5552C1ZQ. 2. The applicant have preferred this application seeking Advance Ruling on the following: 2.1 Taxability Issue (1.1) Do es the health insurance services provided by the Applicant to Tamil Nadu State Government (TNSG) is exempted from GST under the Serial Number 40 of the Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and corresponding TNGST Notification (hereinafter jointly referred to as the Notification )? (1.2) If the Insurance services by the Applicant are held as exempted under Question 1.1 above, then consequently, is reinsurance of the health insurance policy also exempt in accordance with Serial No. 36A of the Notification 12/2017? 2.2 Alternate Questions-Valuation If the Insurance services provided by the Applicant are held by this Hon'ble AAR as Taxable under Question 1.1 above, then the following questions arises on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pient containing the value of the services and GST charged as Annexure 2. That the TNSG has brought to the attention of the applicant that since the entire premium is paid by the State Government, the service shall be exempt under Serial Number 40 of the Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and corresponding TNGST Notification. Specific Facts about the Insurance to TNSG- 4.3 The applicant stated that, the Policy is a health insurance policy of the employees (both retired and present) and also the relatives of such employees for which the premium is paid by the TNSG to the applicant. That each of the Employee, Retiree are given a health card containing their unique reference number and the list of their dependent who are eligible to make the claim. 4.4 The applicant submits that the entire premium is paid by the TNSG directly to the Applicant and the TNSG, for the purposes of full disclosure in this present application, has informed the applicant that it recovers some amount from the State Government Employees ranging from Rs. 300 to Rs. 500. 4.5 The applicant submits that they are not privy to the arrangement between TNSG (i.e., Service Recipient) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied; 5.4. The applicant submits that clause (a) deals with situation where consideration is present. Clause (b) and (c) deals with situation where consideration is absent. That in the present case, consideration is present and accordingly, Clause (a) is applicable - as per which - the person who is liable to pay the consideration will be treated as the 'Recipient' of the Service. 5.5. The applicant submits that in the present case, TNSG enters into the Policy with the Applicant and the TNSG is liable to pay the premium to the applicant and accordingly in terms of 2 (93) (a) of the Act, TNSG is the Service Recipient. Thus, medical insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant to the TNSG are exempt under Sl.No 40 of the Exemption Notification and accordingly, the reinsurance Services are also exempt from GST and consequently no RCM is also applicable wherever the Re-insurer is located outside India. Alternate Question-Valuation 5.11. The applicant further submits that without prejudice, for the sake of argument, it is assumed, but without admitting that it is held that the Insurance Service by the Applicant is taxable, then, only then the interpretation on Valuation arises. If it is held by this Hon'ble AAR that the services are exempt, then this question does not arise. 5.12. The applicant further submitted that in case the transaction is held taxable, the next question is what is the value of the said supply? Section 2 (31) of the Act defines consideration as follows:- (31) consideration in relation to the supply of goods or services or both includes- (a) Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded from the valuation. 5.16. The applicant submitted that without prejudice to above contention, at best (from Department perspective) and at worst (from the Applicant perspective), it can be contended that entire amount is not subsidised by the State Government since they receive some amount from their employees. For instance, the amount of premium collected is say Rs. 1,000/- (which is received by the Applicant from the TNSG) and the amount received by the TNSG from their employees, is say Rs. 40/-, then, at the bare minimum, Rs. 960 (Rs. 1000 Less Rs. 40) should be considered as subsidy from the State Government and consequently GST, if any, can be levied only on Rs. 40/- 5.17 The applicant further submitted that as stated supra, since the entire premium amount is only received from the State Government by the Applicant and the employees are not anywhere involved in the said transaction and also that the employees recovery by the TNSG is between the TNSG and its employees to which the applicant is not privy and consequently, the entire amount should be treated as subsidy and consequently the entire amount received shall be reduced as subsidy from Valuation and the Value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarded as Taxable which automatically means that output transaction is not exempt from GST. 5.23. The applicant reproduced the definition of exempt supply as follows:- (47) exempt supply means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply By mentioning the above, the applicant stated that in terms of Section 2(47) of the Act, an exempt supply means any Supply:- a. Whose Rate of Tax is NIL or b. Exempted under Section 11 of the Act. 5.24. The applicant submitted that in the present case (i.e., the insurance service is held to be taxable), then it attracts 18% Tax rate and hence NIL rate of tax does not apply and further, it is not exempted under Section 11 and consequently it does not fall within the ambit of exempt supply. And since the output supply is not exempt, no reversal of the ITC is warranted and consequently full ITC on the reinsurance premium can be availed by the Applicant. 5.25 The Applicant further submits that there is no provision in the GST Law that if the Output tax is NIL or less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant Tvl. United India Insurance Company Limited and applicant has issued invoice to Commissioner of Treasuries and Accounts, Government of Tamil Nadu (Pensioners) and 2).Commissioner of Treasuries and Accounts, Government of Tamil Nadu. Here service provider is Tvl. United India Insurance Company Limited and service recipient is each and every employee/pensioners. Moreover, premium has been paid by each and every employee/pensioners vide their every month salary but not paid by the Government. Government of Tamil Nadu has been collecting money from its service employees/pensioners and has been paying it to service provider (i.e) applicant Tvl. United India Insurance Company Limited which is diametrically opposite to the definition mentioned in Sl. No. 40 of the Notification no 12/2017-Central Tax(Rate), dt: 28.06.2017. Applicant Tvl. United India Insurance Company Limited exemption claimed based on SI. No. 40 of the said notification is not applicable to NHIS scheme because here total premium is not paid by the State Government, it has been paid by the each and every Government employees/pensioners. Moreover, the petitioner Tvl. United India Insurance Company Limited is clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent GST authorities from the Service Tax Act regime. It has to be verified from the Central Government authorities. 6.3. The Joint Commissioner (ST), Intelligence-II Chennai has also stated that no proceeding relating to the question raised by the applicant is pending in their jurisdiction. 6.4. The concerned Central authority vide letter GEXCOM/TECH/MISC/4603/ 2023-TECH dated 26.01.2024 submitted that the question raised in the application are not pending or has been decided in any proceedings in the case of the applicant and also offered the following comments:- Comment on Q.1.1 - Services provided to the Central Government, State Government, Union Territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union Territory is Nil rated/exempted vide Sl.No.40 of Notification No. 12/2017-CT (Rate) dated 28.06.2017, which was also clarified vide Sl.No.3 of Circular No. 16/16/2017-GST dated 15.11.2017, however it is taxable in other scenario. On examination of the attached document Annexure-1 Annexure-2, it can be seen that the insurance policies issued by the United India Insurance Company Limited to Commissioner of Treasuries an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idy by the Government or subscription from the employees of the State Government are involved in this case. The Authorised Representative replied that the insured in this case is the Tamil Nadu State Government, and that the entire subscription is received from the State Government. In this regard, apart from the submissions made, he undertook to furnish the relevant documents relating to the receipt of premium from the Tamil Nadu State Government within a weeks' time. Accordingly, they furnished the copies of the receipts of premium issued to the Commissioner of Treasuries and Accounts, Government of Tamil Nadu on 12.01.2024. 8.0 DISCUSSION AND FINDINGS: 8.1 We have carefully considered the submissions made by the applicant in their application, submissions made during the personal hearing and the comments furnished by the Centre and State Tax jurisdictional officers. 8.2 The Prime issue raised by the Applicant for ruling, before the Advance Ruling Authority is- 1. Does the health insurance services provided by the Applicant Tamil Nadu State Government (TNSG) is exempted from GST under the SI.No. 40 of Notification No, 12/2017 Central Tax (Rate) dated 28th June, 2017 and corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the State Govt. / Central Govt./ Union Territory for such insurance scheme. 8.4 To examine further, it is pertinent to examine as to how the Health Insurance scheme is provided by the applicant to the Tamil Nadu State Government. On perusal of the Govt. of Tamil Nadu website (https://www.tn.gov.in/go_view/dept), it is seen that the finance department has made available various G.Os issued by them for New Health Insurance Scheme for their employees and pensioners for which the Government decides vide selection of a suitable Public Sector Health Insurance Company through National Competitive Bidding as in the case of New Health Insurance Scheme, 2014. Accordingly, a notice inviting tender has been issued. The Tender Scrutinizing Committee, consisting of the Secretary to Government [Expenditure], Finance (Pension) Department, the Principal Secretary / Commissioner of Treasuries and Accounts and the Director of Medical and Rural Health Services, after invoicing due procedure as per the Tamil Nadu Transparency in Tenders Act, 1998 and the Tamil Nadu Transparency in Tenders Rules, 2000, submitted its report to select the United India Insurance Company Limited, Chennai for impleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recipient of service is the Tamil Nadu Govt, only and the Govt, has accordingly discharged the obligation of consideration by way of premium to the applicant. 8.6 The applicant has also relied upon the Circular No. 16/16/2017-GST, dated 15-11-2017 and the relevant portion is reproduced as under: S.No. Issue Comment 3. Is GST leviable on General Insurance policies provided by a State Government to employees of the State government/ Police personnel, employees of Electricity Department or students of colleges/ private schools etc. (a) where premium is paid by State Government and (b) where premium is paid by employees, students etc.? It is hereby clarified that services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory are exempt from GST under SI. No. 40 of notification No. 12/2017-Central Tax (Rate). Further, services provided by State Government by way of general insurance (managed by government) to employees of the State government/ Police personnel, employees of Electricity Department or students are exempt vide entry 6 of notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium was paid by the State Government. It was further proposed to exempt from tax general insurance policy where total premium was paid by employees or by students of colleges/private schools. 41.1. The Secretary stated that with regard to the above, it was proposed to clarify that services provided to the Central Government, State Government, Union Territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union Territory are exempt from GST under serial no. 40 of Notification No. 12/2017-Central Tax (Rate). Further, service provided by the State Government by way of general insurance (managed by government) to employees of the State Government/ Police Personnel, employees of electricity department or students are exempt vide entry 6 of Notification No. 12/2017-Central Tax (Rate) which exempts Services by Central Government, State Government, Union Territory or local authority to individuals. 8.8 On perusal of the agenda notes, minutes of the meeting and clarification issued, clearly establishes that the intention of the GST Council is to grant exemption on the general insurance services provided to the State Government, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Authority for the National Appellate Authority] to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 or of section 101C, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; 8.12 In the aforementioned question, the supply of goods or services is not being undertaken or proposed to be undertaken by the applicant as the applicant is the recipient of reinsurance service and the supply is being undertaken or proposed to be undertaken by the suppliers of reinsurance service providers, located in India. Hence, we refrain from passing any ruling on the said question with respect to receipt of reinsurance service from domestic Re-insurers. However, with respect to receipt of re-insurance service from re-insurers located outside India, as the liability to pay tax lies with the applicant, this is answered and which is answered in affirmative in terms of exemption provided under SI No. 36A of Notification No. 12/2017 Central Tax (Rate), dated 28-06-2017, as the supply of insurance service to Tamil Nadu State Government falls under entry 40 of Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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