Mumbai: In a relief to over a dozen insurance companies, the Bombay High Court has granted a temporary stay on a substantial demand and associated penalties by the revenue authorities.
The insurance companies, such as Aditya Birla Health Insurance, Oriental Insurance, SBI General Insurance Company, IFFCO Tokio General Insurance and Generali Central Insurance, have approached the court challenging the demand raised by the Goods and Services Tax (GST) authorities.
Other petitioners include companies such as Universal Sompo General Insurance, New India Assurance, Zuno General Insurance, ICICI Lombard General Insurance, TATA AIG General Insurance, Indusind General Insurance and Raheja QBE General Insurance.
The insurance companies have challenged the revenue authorities’ demand and penalty to the tune of over Rs 10,000 crore.
“The court stay will give relief to around Rs 10,000 crore demand by GST authority,” said Amit Maheshwari managing partner AKM Global. “The matter will now be tested on merits, but the interim protection itself is a meaningful safeguard for Insurance facing legacy exposes.”
The order brings immediate relief from substantial GST demands that have clouded industry operations. The insurance regulator had change the expense of management guidelines post the tax notices, giving relief to insurers.
"The GST Council had already recommended a clear position on co-insurance premium and ceding commission, which was subsequently implemented through CBIC circular clarifications, said Maheshwari. "The order reinforces that such circular-based guidance cannot be disregarded in assessment proceedings."
Senior Advocates Arvind Datar and Rohan Shah, appearing for the insurance companies, argued that the demand is per se in the teeth of the circulars of October 11, 2024, and January 28, 2025, issued by the Central Board of Indirect Taxes and Customs (CBEC), which were issued in pursuance of a decision being taken by the GST Council.
“In six cases within the jurisdictional officers at Meerut, Delhi, and Pune and two cases from the Mumbai jurisdiction, such demands are stated to be dropped,” argued companies through their counsel. “These six orders wherein the department has dropped the demands need to be placed on record, contending that such action was in consonance with the Circular, whereas in the present case, a contrary approach has been adopted by the concerned authority,” argued the lawyers further.
The division bench of Justice GS Kulkarni and Justice Aarti Sathe allowed an ad interim stay on the revenue department's order (of tax demand) until the next date of hearing. The court will hear the matter further on February 18.
The insurance companies, such as Aditya Birla Health Insurance, Oriental Insurance, SBI General Insurance Company, IFFCO Tokio General Insurance and Generali Central Insurance, have approached the court challenging the demand raised by the Goods and Services Tax (GST) authorities.
Other petitioners include companies such as Universal Sompo General Insurance, New India Assurance, Zuno General Insurance, ICICI Lombard General Insurance, TATA AIG General Insurance, Indusind General Insurance and Raheja QBE General Insurance.
The insurance companies have challenged the revenue authorities’ demand and penalty to the tune of over Rs 10,000 crore.
“The court stay will give relief to around Rs 10,000 crore demand by GST authority,” said Amit Maheshwari managing partner AKM Global. “The matter will now be tested on merits, but the interim protection itself is a meaningful safeguard for Insurance facing legacy exposes.”
The order brings immediate relief from substantial GST demands that have clouded industry operations. The insurance regulator had change the expense of management guidelines post the tax notices, giving relief to insurers.
"The GST Council had already recommended a clear position on co-insurance premium and ceding commission, which was subsequently implemented through CBIC circular clarifications, said Maheshwari. "The order reinforces that such circular-based guidance cannot be disregarded in assessment proceedings."
Senior Advocates Arvind Datar and Rohan Shah, appearing for the insurance companies, argued that the demand is per se in the teeth of the circulars of October 11, 2024, and January 28, 2025, issued by the Central Board of Indirect Taxes and Customs (CBEC), which were issued in pursuance of a decision being taken by the GST Council.
“In six cases within the jurisdictional officers at Meerut, Delhi, and Pune and two cases from the Mumbai jurisdiction, such demands are stated to be dropped,” argued companies through their counsel. “These six orders wherein the department has dropped the demands need to be placed on record, contending that such action was in consonance with the Circular, whereas in the present case, a contrary approach has been adopted by the concerned authority,” argued the lawyers further.
The division bench of Justice GS Kulkarni and Justice Aarti Sathe allowed an ad interim stay on the revenue department's order (of tax demand) until the next date of hearing. The court will hear the matter further on February 18.
