Delhi HC Quashes GST Demand on Reinsurance Services for Oriental Insurance

Oriental Insurance Company Limited Vs Additional Commissioner CGST Delhi North & Anr. (Delhi High Court)

In the case Oriental Insurance Company Limited vs Additional Commissioner, CGST Delhi North & Anr., the Delhi High Court heard the matter through hybrid mode. The petitioner, Oriental Insurance Company Limited, filed a writ petition under Article 226 of the Constitution of India challenging three actions: (i) the Order-in-Appeal No. 262/Commr./Central-Tax/Appeal-I/Delhi/2024 dated 11 July 2024 passed by the Commissioner (Appeals-I), CGST, Delhi; (ii) the Order-in-Original No. 58/ADC/D.N./Manish Kumar Jha/2023 dated 29 December 2023 issued by the Additional Commissioner, CGST Delhi North; and (iii) the Show Cause Notice [FORM GST DRC-01] bearing Reference No. 50/GST/2023-24 dated 27 September 2023 issued by the Additional Commissioner, CGST Delhi North.

The key issue raised before the Court was whether reinsurance services availed by the petitioner between 1 July 2017 and 24 January 2018 were liable for Goods and Services Tax (GST). The Court had previously, on 18 July 2025, directed learned Senior Standing Counsel (SSC) Mr. Ojha to obtain instructions in this matter.

During the hearing, Mr. Ojha submitted that the impugned orders were passed before the issuance of CBIC Circular No. 228/22/2024-GST dated 15 July 2024 and therefore the benefit of that circular might not be available to the petitioner. The relevant portion of the circular was quoted, stating that representations had been received to exempt or regularize GST liability for the period from 1 July 2017 to 24 January 2018 on reinsurance of specified general and life insurance schemes that were otherwise exempt under Sl. Nos. 35 and 36 of Notification No. 12/2017-CT(R) dated 28 June 2017. By the inclusion of Entry 36A effective from 25 January 2018, reinsurance of such exempted insurance schemes was also exempted. The GST Council, in its 53rd meeting held on 22 June 2024, recommended regularization of GST liability for reinsurance of such exempt insurance schemes for the past period, from 1 July 2017 to 24 January 2018, on an “as is where is” basis. Accordingly, the circular formalized this regularization.

Counsel for the petitioner referred to the Delhi High Court’s decision in AXA France Vie-India v. Union of India & Ors. (W.P.(C) 4136/2024), where a similar issue involving another insurance company was considered. In that case, the Court examined the GST treatment of reinsurance services in light of the original and amended notifications. The coordinate bench noted that on 18 January 2018, the GST Council introduced a new entry in Notification No. 12/2017 dated 28 June 2017 to exempt reinsurance services linked to government insurance schemes. This amendment took effect from 25 January 2018 through Entry 36A. However, it was observed that Entry 36A initially referenced only Serial Nos. 35 and 36 but omitted Serial No. 40, which also covered certain government insurance schemes. This omission was later corrected by an amendment dated 26 July 2018, explicitly including Serial No. 40.

The AXA France Vie-India judgment discussed whether this correction was curative in nature and whether it applied retrospectively to the period before 27 July 2018. The GST Council, in its 53rd meeting on 22 June 2024, deliberated on this issue and accepted the Fitment Committee’s recommendation to regularize GST payments on reinsurance services for insurance schemes where the total premium was paid by the government. The Council’s decision, recorded in Note 5.46, approved regularization of GST liability for the period from 1 July 2017 to 26 July 2018 on an “as is where is” basis through the issuance of a circular.

Following this decision, the Department of Revenue, Ministry of Finance, issued the clarificatory Circular No. 228/22/2024-GST on 15 July 2024. The circular confirmed that GST liability on reinsurance of specified general and life insurance schemes would be regularized for the period from 1 July 2017 to 24 January 2018. The Delhi High Court in AXA France Vie-India observed that both the GST Council and the Union Government had taken a conscious decision to regularize this period, and therefore any demand for GST on reinsurance services during that period would not stand.

In the present case, Oriental Insurance sought the same relief for the same period, i.e., from 1 July 2017 to 24 January 2018. The Delhi High Court noted that the orders challenged by the petitioner were issued before the circular’s release, and hence the authorities had not taken the circular into account. However, the Court held that the benefit of the circular could not be denied to the petitioner merely because it was issued later. The circular, being clarificatory and regularizing in nature, applied directly to the petitioner’s case.

The Court observed that the circular and the GST Council’s recommendation clearly covered the petitioner’s period of dispute and that the precedent set in AXA France Vie-India applied equally to the present case. Consequently, the Delhi High Court set aside the Order-in-Original dated 29 December 2023 and the Order-in-Appeal dated 11 July 2024. The benefit of Circular No. 228/22/2024-GST dated 15 July 2024 was extended to Oriental Insurance Company Limited. The writ petition, along with pending applications, was accordingly disposed of in these terms.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioner under Article 226 of the Constitution of India, inter alia, challenging the following:

i. Order-in-Appeal No. 262/Commr./Central-Tax/Appeal-I/ Delhi/2024 dated 11^th July 2024 passed by the ld. Commissioner (Appeals-i), CGST, Delhi;

ii. Order-in-Original No. 58/ADC/D.N./Manish Kumar Jha/2023 dated 29th December, 2023 passed by the Respondent No. 1 and

iii. The Show Cause Notice [FORM GST DRC-01] bearing Reference No. 50/GST/2023-24 dated 27th September, 2023 issued by the Respondent No.2.

3. The question that has been raised in this case is as to whether re- insurance services which are availed of by the Petitioner- M/s Oriental Insurance Company Limited would be liable for GST for the period between 01^st July 2017 to 24^th January 2018.

4. Vide order dated 18^th July 2025, Mr. Ojha, ld. SSC was directed to seek instructions in this matter.

5. Today, Mr. Ojha, ld. SSC for the Respondent has sought instructions and submits that the Order-in-Original and the Order-in-Appeal in this case were passed prior to the issuance of the Circular No. 228/22/2024-GST on 15^th July 2024 (hereinafter, ‘circular’) and therefore, the benefit of the said circular may not be extendible to the Petitioner. The relevant portion of the said circular reads as under:

“6. GST liability on the reinsurance of specified general and life insurance schemes.

6.1 Representations have been received to either exempt or regularize the GST liability, for the period from 01.07.2017 to 24.01.2018, on reinsurance of specified general insurance and life insurance schemes, which are exempt from GST.

6.2 Certain specified general insurance and life insurance schemes are exempt from GST under SI. Nos. 35 and 36 of notification No. 12/2017-CT(R) dated 28.06.2017. Vide entry at SI. No. 36A of the said notification, reinsurance of the aforesaid exempted insurance schemes has also been exempted w.e.f. 25.01.2018.

6.3 GST Council in its 53rd meeting held on 22nd June, 2024 has recommended to regularize the GST liability on such reinsurance of exempt general insurance and life insurance schemes for the past period, i.e. from 01.07.2017 to 24.01.2018, on ‘as is where is’ basis.

6.4 Thus, as recommended by the GST Council, GST liability on the services by way of reinsurance of the insurance schemes specified in SI. Nos. 35 and 36 of notification No. 12/2017-CT(R) dated 28.06.2017 is regularized for the period from 01.07.2017 to 24.01.2018 on ‘as is where is’ basis.”

6. However, ld. Counsel for the Petitioner has taken the Court through a decision of a Co-ordinate Bench of this Court in W. P. (C) 4136/2024 titled ‘AXA France Vie-India v. Union of India & Ors.’, wherein this very issue relating to another insurance company has been considered by this Court and it has been observed as under:

“7. It appears that on 18 January 2018, the GST Council introduced a new entry in Notification No.12/2017 dated 28 June 2017 exempting reinsurance services when offered in relation to government insurance schemes. It becomes pertinent to note that the said exemption notification at Serial No.40 had made

8. The said original notification saw an amendment which was promulgated on 25 January 2018 and in terms of which Entry 36A came to be introduced and the said amending entry read as follows: –

9. A doubt appears to have arisen in light of the amended Serial No.36A while speaking of services by way of reinsurance specifying it to be relatable to Serial Nos. 35 or 36 in the original notification. There was thus, perhaps an inadvertent error in failing to take note of Serial No.40 which too formed part of the original notification dated 28 June 2017.

10. Upon this apparent error coming to light, yet another amending notification came to be issued on 26 July 2018 and clause (k) of which provided as follows:-

“(k) against serial number 36A, in the entry in column (3), after figures “36”, the word andfigures “or 40” shall be inserted;”

11. Entry 36A thus came to include Serial No.40 specifically. The issue which therefore remained for consideration was whether the aforesaid amendments would be liable to be viewed as curative, and thus being applicable to the period prior to 27 July 2018, the date from which the said notification was stated to be applicable and whether the same would clarify the position which would obtain prior thereto.

12. These aspects ultimately fell for deliberation before the GST Council in its meeting held on 22 June 2024 and in which the recommendations of the Fitment Committee for regularization of payment of GST on reinsurance services came to be accepted.

13. This becomes apparent from a reading of Note 5.46 and the decision expressly taken by the Council in that regard and which is reproduced hereinbelow:-

“5.46 Joint Secretary, TRU then presented the next agenda item relating to a request to clarify that reinsurance services of the insurance schemes for which total premium is paid by the Government (Sl. No. 40 of the notification No. 12/2017 CTR) are exempt from GST for the period 01.07.2017 to 26.07.2018. She stated that in the 28th GST Council meeting held on 21.07.2018, it was decided to exempt re-insurance of insurance schemes already exempt under Sl. No. 40 of Notification No. 12/2017-CTR. The said exemption was notified w.e.f. 27.07.2018. The issue was examined by the Fitment Committee and it recommended to regularize the payment of GST on reinsurance services of the insurance schemes for which total premium is paid by the Government (SI No. 40 of Notification No. 12/2017-CT(R) dated 28.06.2017) for the period from 01.07.2017 to 26.07.2018 on „as is where is‟ basis by way of issuance of a Circular.

Decision: The Council approved the recommendation of the Fitment Committee to regularize the payment of GST on reinsurance services of the insurance schemes for which total premium is paid by the Government (SL. No. 40 of Notification No. 12/2017-CT(R) dated 28.06.2017) for the period from 01.07.2017 to 26.07.2018 on ‘as is where is’ basis by way of issuance of a Circular. ”

14. Pursuant to the said decision taken by the GST Council, a clarificatory Circular came to be issued by the Department of Revenue in the Ministry of Finance on 15 July 2024 and insofar as GST liability on reinsurance is concerned it was clarified as under:-

““6. GST liability on the reinsurance of specified general and life insurance schemes. 6.1 Representations have been received to either exempt or regularize the GST liability, for the period from 01.07.2017 to 24.01.2018, on reinsurance of specified general insurance and life insurance schemes, which are exempt from GST. 6.2 Certain specified general insurance and life insurance schemes are exempt from GST under Sl. Nos. 35 and 36 of notification No. 12/2017- CT(R) dated 28.06.2017. Vide entry at Sl. No. 36A of the said notification, reinsurance of the aforesaid exempted insurance schemes has also been exempted w.e.f. 25.01.2018. 6.3 GST Council in its 53rd meeting held on 22nd June, 2024 has recommended to regularize the GST liability on such reinsurance of exempt general insurance and life insurance schemes for the past period, i.e. from 01.07.2017 to 24.01.2018, on „as is where is‟ basis.

6.4 Thus, as recommended by the GST Council, GST liability on the services by way of reinsurance of the insurance schemes specified in Sl. Nos. 35 and 36 of notification No. 12/2017-CT(R) dated 28.06.2017 is regularized for the period from 01.07.2017 to 24.01.2018 on „as is where is‟ basis.”

15. The GST Council as well as the Union Government, thus appear to have taken a conscious decision to regularize the period between 01 July 2017 and 26 July 2018.

16. Undisputedly, the impugned order relates to that very period. While it is true that on 20 December 2023, when the impugned order came to be passed, these clarifications had not been rendered, undisputedly, the same would not sustain in light of the stand which has been taken by the respondents and is principally noticed hereinabove.”

7. Heard. In the present case, the benefit in respect of re-insurance services is being sought for the period between 01^st July 2017 to 24^th January 2018. In respect of the said period, the Circular No. 228/22/2024-GST dated 15th July 2024 has extended the benefit. The GST Council, in its 53rd Meeting held on 22nd June, 2024, recommended the said clarification, which was thereafter incorporated vide issuance of the said circular. The relevant portion of the recommendation of the GST Council reads as under:

“6. GST liability on reinsurance services of specified insurance schemes covered by Sr. Nos. 35 & 36 of notification No. 12/2017-CT (Rate) dated 28.06.2017 may be regularized on ‘as is where is’ basis for the period from 01.07.2017 to 24.01.2018”

8. Since the Order-in-Original dated 29th December, 2023 and the Order-in-Appeal dated 11^th July 2024 were passed prior to the issuance of the circular, the concerned authorities obviously did not take note of the same. However, the benefit of the circular cannot be denied to the Petitioner. In view thereof, the circular would be squarely applicable in the case of the Petitioner. The decision in AXA France Vie-India (Supra) would also be applicable in the present case.

9. Accordingly, the Order-in-Original dated 29th December, 2023 and the Order-in-Appeal dated 11^th July 2024 are set aside. For the said period, the benefit of circular dated 15^th July 2024 is extended to the Petitioner.

10. The petition, along with the pending applications, if any, is disposed of in the aforesaid terms.