Hyderabad: The Telangana Appellate Authority for Advance Ruling (AAAR) has upheld that no Goods and Services Tax (GST) exemption would be available on medical insurance premiums taken to provide health insurance to employees, pensioners, and their family members.
The bench comprising of Neetu Prasad and BV Siva Naga Kumari has perceived that the insurance services for employees and their family members received by the appellant (HMWSSB) are not in direct and proximate relation to the water supply and sewerage-related functions, entrusted under Article 243W of the Constitution of India.
The bench hence concluded that the supplies received by the appellant are not exempted from GST.
The Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB) has paid the medical insurance premiums taken to provide health insurance to the employees, pensioners, and their family members, and the vehicle insurance policies are taken to provide insurance to the vehicles owned by the Board.
The appellant said that they are exempt from paying GST in view of Entry No. 3 of notification number 12/2017, Central Tax (Rate), dated June 28, 2017.
The notification said that for pure services provided to the central government, state Government, union territory local authority or government authority in relation to any function entrusted to a panchayat or in relation to any function entrusted to a municipality, the rate of GST is zero.
The board sought an advance ruling on the issue of whether medical insurance premiums were taken to provide health insurance to the employees, pensioners, and their family members, who were eligible for exemption.
The AAAR stressed that GST exemption will be applicable only when the vehicles are directly used to provide services under Schedule XII of the constitution and not in cases where the services are used for the transportation of employees, board members, or other persons with no direct relationship to functions discharged under Article 243W.
The HMWSSB while challenging the order of AAAR, contended that the supply of services is eligible for GST exemption since the board was formed in 1989, under the provisions of the Hyderabad Metropolitan Water Supply and Sewerage Act 1989, with various functions and responsibilities in the Hyderabad Metropolitan Area.
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