Order Date- 31 May 2022

Fact

• The Applicant, M/s Executive Council of Insurers, is a Quasi-Judicial authority established under Redressed of Public Grievances Rules 1998 & Ombudsman Rules, 2017, framed by the Central Government and notified in Gazetted. This is an administrative body set up to facilitate the functioning of offices of Insurance Ombudsmen in India.

• As per Insurance Ombudsman Rules 2017, the Life Insurance Council and the General Insurance council should collect the necessary funds from the Insurance Companies and remit it to the applicant for the expenses related to managing the offices of the applicant and 17 Insurance Ombudsmen in the Country.

• Applicant’s day to day expenses including salaries and other offices maintenance expenses are met through the funds received from the 58 insurers. These funds are received through the “Life Insurance Council” and the “General Insurance Council”. The funds so received are distributed to the 17 Centres for taking care of the salaries, office maintenance and their day to day expenses.

Issue

1. Whether services provided by the applicant and 17 ombudsman officers are exempt from GST?

2. Whether GST is applicable to the applicant and 17 Offices of Insurance Ombudsmen which are governed by the applicant? 

3. Whether the above amount received by the applicant from Life Insurance Council and General Insurance Council are also exempt from GST?

Order

• The authorities observed that that applicant is rendering services to the aggrieved persons who have grievances against insurance companies/insurers. The said service is provided by way of resolving the disputes of the said aggrieved persons with insurance companies. Hence, the impugned activity undertaken by the applicant amounts to 'supply of services'. 

• The Authorities further observed that the Applicant receives funds from Life Insurance & General Insurance Councils. These funds are received by the applicant to perform their activities, by way managing their salaries and other administrative expenses, which have already held be a Supply of service. 

• The consideration for the impugned supply of services, instead of being paid by the aggrieved complainants are being paid by the said Councils/ insurance companies and satisfy sub-section (a) of the section 2(31) of the CGST Act. Therefore, funds received by applicant are covered under definition of 'consideration' paid for the supply of services as they come under the scope of 'by any other person'.

In view of the above, the following decision is provided:

1. The services provided by the applicant and 17 ombudsman officers are not exempt from GST.
2. GST is applicable to the applicant and 17 Offices of Insurance Ombudsmen which are governed by the applicant.
3. The concerned amounts paid by the Life Insurance Council and General Insurance Council to the applicant are taxable and not exempt.