The Delhi High Court recently quashed a demand order issued against AXA France Vie-India (AXA) demanding the payment of Integrated Goods and Services Tax (IGST) on reinsurance services rendered by AXA.
AXA France Vie-India is a part of the AXA Group, a global insurance company operating in the insurance and reinsurance sectors in India. AXA offers life insurance products as well as reinsurance, which involves transferring portions of risk from insurance companies to reduce their exposure to large financial losses.
The Petitioner is party to Facultative Proportional Reinsurance Agreements with Government Entities in the States of Rajasthan and Maharashtra.
Get a Copy of GST on Services Ready Reckoner, Click here
The Writ Petition was lodged seeking to quash an Impugned Tax Demand Order and allied Show-Cause Notice (SCN) issued against the Petitioner’s failure to pay IGST on reinsurance services during the period between 01.07.2017 and 25.07.2018.
The Writ sought further relief that the Notification No. 02/2018 Central Tax (Rate) dated 25.01.2018 and Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 issued pursuant to the recommendations of the 25th and 28th GST council meetings respectively are curing and clarificatory in nature, applicable with effect from 01.07.2017 or at least with effect from 25.01.2018
The Petitioner referred to the amendment of Entry 36A in Notification No.12/2017, to include Entry No.40 dated 28.06.2017 exempting reinsurance services when offered in relation to government insurance schemes wherein the entire premium amounts are disbursed by the Government.
The impending issue at this stage was to determine whether the amendment to include Entry No.40 would remain as curative, exempting the period prior to 27.07.2018,i.e., the date from which the notification would be applicable.
Get a Copy of GST on Services Ready Reckoner, Click here
The two-member Bench of the Delhi High Court constituted by Justice Yashwant Varma and Justice Ravinder Dudeja observed that the issues at hand were deliberated during the Goods and Services Tax (GST) Council Meeting held on 22.06.2024; Note 5.46 from the Minutes of the 53rd GST Council Meeting provides that the Council approved the recommendations of the Fitment Committee to regularize payment of GST on reinsurance of insurance schemes wholly funded by the Government and specified in Sl Nos. 35 and 36 of Notification No.12/2017-CT(R) for the disputed period from 01.07.2017 to 26.07.2018.
The Regularization was effected by means of a clarificatory Circular issued by the Department of Revenue on 15.07.2024.
In light of the observations, the Delhi High Court allowed the Writ Petition while insisting that the GST Council and Union Government had taken conscious decisions to regularize the period between 01.07.2017 to 26.07.2018 and further quashed the impugned demand order dated 20.12.2023 issued against the Petitioner.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
