The Appellant, M/s. Hyderabad Metropolitan Water Supply and Sewerage Board, had paid Medical insurance premium for the employees, pensioners and their family members and vehicle insurance policy for the vehicles owned by the Company. The Appellant claimed that they were exempted from paying GST in accordance with the Entry No. 3 of the Notification No. 12/2017 dated 28 June 2017, being a Governmental Authority. As per the said notification, services (excluding works contract service or other composite supplies involving the supply of any goods) provided to the Central Government, the State Government, Union Territory, local authority, or Governmental authority, related to any function entrusted to a panchayat or municipality under the Constitution of India, would be chargeable to NIL GST. The Appellant had sought an Advance ruling to ascertain whether who were eligible to claim exemption on the GST payable for medical insurance premiums provided to the employees, pensioners, and their family members.
The Appellant contended that they were constituted under the provisions of the Hyderabad Metropolitan Water Supply and Sewerage Act 1989, with various functions and responsibilities in the Hyderabad Metropolitan Area. Hence the supply of services provided by them are eligible for GST exemption. The AAAR observed that in order to claim the exemption under the Entry No 3 of the Notification, three conditions are needed to be satisfied viz. (i) Services provided must be 'Pure Service', (ii) services provided should be by way of any activity in relation to any function entrusted to a Municipality under article 243W of the Constitution; and (iii) After 01 January 2022, exemption is available only if it is provided to Central Government, State Government and Local Authority only.
It was further observed that as the insurance supplies made to the board for its employees and their family members are not in relation to any function entrusted to the municipality, the Appellant did not fulfil the second condition as per the Notification. It was also been observed that the expression 'in relation to' specified in the notification is to be interpreted as a direct and proximate relationship to any function granted to a municipality under Article 243W of the Constitution. Hence, the Appellant does not fall under the exemption of the Notification. Accordingly, the AAAR upheld the order of AAR, concluding that no GST exemption is available on medical insurance premiums taken to provide health insurance to employees, pensioners, and their family members.
Hyderabad Metropolitan Water Supply And Sewerage Board [2022-VIL-86-AAAR]
Disclaimer:
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
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