The Telangana State Authority For Advance Ruling (AAR) has held that the exemption under Goods and Services Tax (GST) is not available to Medical insurance premium taken to provide health Insurance to the employees, pensioners and their family members by the Government entities.
The applicant, M/s. Hyderabad Metropolitan Water Supply and Sewerage Board have paid Medical insurance premium taken to provide health Insurance to the employees, pensioners and their family members and Vehicle insurance Policy taken to provide Insurance to the vehicles owned by the Board.
The applicant approached the AAR bench for clarification regarding the levy of GST on medical insurance premium taken to provide health Insurance to the employees, pensioners and their family members, as per Entry No. 3 of the Notification Number 12/2017 – Central Tax (Rate), dt 28th June, 2017.
The applicant submitted that they are 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.
They further relied on the decision of the Supreme Court of India in the case of Madhav Rao Jivaji Rao Scindia Vs Union of India wherein it was observed that the expression “relating to” means to bring into relation or establish a relation. It was further clarified that there should be a direct and immediate link with a covenant and that there cannot be any independent existence outside such covenant.
Concluding the order, the AAR bench consists of Sri B. Raghu Kiran, IRS, Additional Commissioner (Central Tax) Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) held that the Medical insurance premium taken to provide health Insurance to the employees, pensioners and their family members, eligible for GST exemption as mentioned in Entry No. 3 of the Notification Number 12/2017 – Central Tax (Rate), dt 28th June, 2017.
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