The Maharashtra Appellate Authority for Advance Ruling ( AAAR ) has held that any amount collected towards charges collected under the “Unparallel Health Insurance Scheme” will not be subjected to the levy of GST in terms of entry at SI. No. 74 of the exemption Notification No. 12/2017-C.T. (R) dated 28.06.2017.
In response to the Government of India’s Initiative to fulfil its constitutional obligations, the Kasturba Health Society, the applicant emerged as Charitable Institution with the sole objective of attending to the health needs of rural India.
On account of its Charitable Objects of solely focusing on Health and Medical Education. the Appellant society was also registered under Section 12AA of the Income Tax Act, 1961 besides having recognition under the Foreign Contribution Regulation Act 1976. The society has since carried out various Health-related research activities, and it was recognised as a “Research Institute” by the Department of Science and Technology. Government of India, and further under Section 35(1)00 of the Income Tax Act 1961.
The Appellant floats a scheme, namely, “Unparallel Health Insurance Scheme” under which the Appellant charges a nominal specific amount From the public who intends to avail the health care services from the Appellant in future at the concessional rate, the authority observed that the Appellant have not obtained any license or approval from the IRDA1 (Insurance Regulatory & Development Authority of India) to run any insurance business on their account andthe said scheme cannot be considered like insurance services.
The Authority for Advance Ruling has classified the said activities under residuary entry at SI. No. 35 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017. and held that such charges collected towards the subject scheme will be leviable to GST at the rate of 18%(CGST @9%+SGST @9%).
A Coram comprising Dr D.K. Srinivas, Member (Central Tax) and Shri Rajeev Kumar Mital, Member (State Tax) modified the ruling of Maharashtra and held that the charges collected under the “Unparallel Health Insurance Scheme” are to be considered as an advance towards the provision of the health care services to the subscribers of this scheme, and accordingly, any amount collected towards this scheme will not be subjected to levy of GST in terms of the entry at SI. No. 74 of the exemption Notification No. 12/2017-C.T. (R) dated 28.06.2017.
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