TMI Blog2019 (10) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... ts business by any means. Therefore, activity of recovery of 50% of the cost of insurance premium cannot be treated as an activity done in the course of business or for the furtherance of business. The recovery of 50% of Parental Health Insurance Premium from employees does not amounts to supply of service under Section 7 of the Central Goods and Service Tax Act, 2017. - GST-ARA-19/2019-20/B-108 - - - Dated:- 4-10-2019 - SHRI B. TIMOTHY, AND SHRI A.A. CHAHURE, MEMBER PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Service Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. JOTUN INDIA PVT LTD. The applicant is seeking an advance ruling in respect of the following question. Whether recovery of 50% of Parental Health Insurance Premium from employees, amounts to supply of service under Section 7 of the Central Goods and Service Tax Act, 2017? At the outset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the insurance premium amount from the employees who opt for the scheme and the balance 50% premium cost is borne by the Applicant. Thus, it is very clear that the applicant is not providing any service to its employees but recovering 50% of the cost of the premium for the service rendered by the insurance company. (3) As per Schedule-III of the CGST Act, 2017, services by an employee to employer in the course of or in relation to his employment are not treated as a supply of service. However, since the Applicant recovers certain amount from its employees against the insurance premium, doubt is raised whether the same will result in supply of service under Section 7 of the CGST Act, 2017 and GST will be required to be paid on the same. (4) The term supply is defined under Section 7 of the CGST Act, 2017 which is reproduced below: 7. (1) For the purposes of this Act, the expression supply includes - (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods and services in connection with commencement or closure of business, (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such club, and any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities (8) From the above definition, the term business broadly means any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity whether or not it is for pecuniary benefits. Any activity ancillary or incidental to these activities are also covered as business. It has also been provided that any activity or transaction falling in above categories would be business whether or not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the GST laws. In fact, what is happening in this case is that since the applicant is recovering 50% of the premium paid on the Mediclaim from their employees, they want to treat the same as rendering of insurance output service to their employees and therefore they are contending that they are entitled to 100 % input tax credit on the insurance premium paid to the insurance company in terms of Section 17(5)(b)(iii) of the GST Act, 2017, mentioned above. They have already submitted that they are primarily engaged in distribution of steel coils and also perform low value added processing function in respect of some of the traded goods based on customer s requirements. The Applicant has brought nothing on records to show that they are an insurance company and registered with such authorities. Hence, we find that they are not rendering any service of health insurance to their employees and hence, there is no supply of services in the instant case. (14) Considering the above order pronounced by this authority, the applicant seeks ruling on taxability of parental mediclaim insurance recovery from the employees under GST. 3. CONTENTION - AS PER THE CO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remium from the employee, the ARA Ruling (Advance Ruling NO.GST-ARA-36/2018-19/B-110, Dated 7th September, 2018) = 2019 (2) TMI 63 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA need to be observed, As per this ruling it is observed as follows; The applicant has brought nothing on record to show that they are Insurance Company and registered with such authorities. Hence it appears that the applicant is creating this fiction of providing health insurance to their employees only to avail 100% ITC of payments made to the insurance companies . Therefore, considering the provision of Section 7 of CGST Act, 2017 and ARA Ruling (Advance Ruling NO.GST-ARA-36/2018-19/B-110, Dated 7th September, 2018) = 2019 (2) TMI 63 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA , there is no supply of services and also credit cannot be claimed of GST paid on such medical insurance policy. 4. HEARING Preliminary hearing in the matter was held on 20.09.2019. Shri Manas Joshi, Consultant and GST Practitioner appeared and made written submissions and requested for admission of their application. The application was admitted and taken up for final hearing as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is fixed as per the number of parents involved therein. The applicant will bear 50% amount for maximum 2 members only and rest of money will be paid by respective employee. It is cashless Mediclaim insurance policy for the lock-in period of 3 years. The mediclaim insurance policy is made from The Oriental Insurance Company Ltd . Further we find from the sample copy of insurance policy submitted before us by the applicant that the applicant initially pays the entire premium along with taxes and then recovers 50% of the premium through salary in one installment in case of staff and in three installments in case of operators as the case may be. The Applicant is not in the business of providing insurance coverage. Secondly, to provide parental insurance cover, is not a mandatory requirement under any law for the time being in force and therefore, non-providing parental insurance coverage would not affect its business by any means. Therefore, activity of recovery of 50% of the cost of insurance premium cannot be treated as an activity done in the course of business or for the furtherance of business. (4) we have referred to the term Supply described under Section 7 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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