GST council furnished the notices before 20 general insurance companies with the functionality in Special Economic Zones (SEZs), asking for Rs 2000 crore in unpaid dues pertinent to the services furnished before the employees of industrial units within these zones and their families.
The companies that have received show-cause notices from the Directorate of GST Intelligence (DGGI) include HDFC Ergo General Insurance Co, Star Health & Allied Insurance, Cholamandalam MS General Insurance Co, New India Assurance Co, and United India Insurance Co. The notices reference Integrated GST (IGST) issues, with the DGGI alleging misuse of provisions that exempt certain SEZ services u/s 16 of the IGST Act.
The insurance services furnished before the SEZ units would be waived from the GST it was revealed in the investigation that the insurers extended such waiving before the group medical insurance coverage for SEZ employees and their families. As per the report, the DGGIs probe shows that the IGST has not been paid on such extended services prompting the show cause notices (SCN).
The same development shows the second scrutiny of the insurance sector via the DGGI for the alleged GST evasion. Earlier 30 insurance firms obtained notices for the bogus practices pertinent to the commission payments before the agents, with claims of GST evasion of more than Rs 5500 crore. Such firms have challenged the notices to the appellate authority.
Star Health and HDFC Ergo Representatives have yet to answer the requests for the comment and the other companies cannot arrive for immediate clarification.
The insurance companies in their defense directed a letter from the Ministry of Commerce and Industry which shows the authorized operations eligible for IGST exemption in SEZs.
