Interim Relief on Co-insurance and Ceding Commission: Conflict with GST Council Circulars

The Issue

Whether the GST Department can continue to demand tax on co-insurance premiums and ceding commissions despite the GST Council issuing specific circulars (dated 11-10-2024 and 28-1-2025) to drop such demands, and whether a “stay” should be granted when jurisdictional officers are taking contradictory stands across the country.

The Facts

The Demand: The Additional Commissioner confirmed a GST demand against the petitioners regarding co-insurance premiums and ceding commissions.
The Legal Conflict: The petitioners argued that these demands directly violate CBEC Circulars (issued following GST Council recommendations) which clarify that these transactions are not subject to the disputed tax.
Inconsistency: The petitioners pointed out that for the exact same issue, authorities in Meerut, Delhi, Pune, and Mumbai had already dropped similar demands, whereas the current authority took a contrary, aggressive stance.
Requirement for Record: The petitioners requested that the six orders where demands were dropped be placed on record to prove the department’s internal inconsistency.

The Decision

Service of Petitions: Since the counsel for the Respondents was recently instructed and all petitions had not been served, the Court ordered full service of documents.
Reply Required: The Respondents were directed to file a reply affidavit addressing why their approach differs from the circulars and the other jurisdictional offices.
Ad-interim Stay: Recognizing the prima facie strength of the petitioners’ argument and the clear conflict with government circulars, the Court granted an ad-interim stay on the demand orders until the next hearing.
Outcome: Proceedings stayed. In favour of assessee.

HIGH COURT OF BOMBAY

Aditya Birla Health Insurance Co.Ltd.

Union of India^*

Aarti Sathe and G. S. KULKARNI, JJ.

WRIT PETITION NOS. 17706 & 17712 OF 2025, 133, 136, 323, 495, 894, 897, 896, 893, 901 & 898 OF 2026

JANUARY 20, 2026

Hasarkar, Vijay H. Kantharia and Ms.Megha Bajoria for the Respondent.

ORDER

1. This is a batch of petitions raising common issues of law and facts. We have heard Shri Arvind Datar and Mr.Rohan Shah, learned Senior Advocates for the Petitioners.

2. The challenge in these petitions is to an order passed by the Additional Commissioner, Central Goods and Service Tax and Central Excise, Palghar Commissionerate thereby confirming a GST demand on the Petitioners, which is in respect of co-insurance premium and/or ceding commission, against the respective Petitioners and subject matter of these writ petitions.

3. The primary contention as urged on behalf of the Petitioners is that the demand is, per se, in the teeth of the Circular dated 11 ^th October 2024 and 28^th January 2025 issued by Central Board of Indirect Taxes and Customs (CBEC) which were issued in pursuance of a decision being taken by the GST Council. The GST Council is also impleaded as party. It is contended that in fact in six cases within the jurisdictional officers at Meerut, Delhi, Pune and two cases from Mumbai jurisdiction, such demands are stated to be dropped. One of such orders is placed on record.

4. Mr.Shah has contended that in the reply affidavit to be filed on behalf of Respondents, these six orders wherein the department has dropped the demands, needs to be placed on record, in contending that such action was in consonance with the Circular, whereas in the present case, a contrary approach has been adopted by the concerned authority.

5. We have heard learned counsel for the parties for some time. Ms.Bharucha representing the Respondents stated that she has recently been instructed to appear in these proceedings. Also all petitions are not served on the Respondents.

6. Let all the petitions be served during the course of the day. The Respondents to file reply affidavit on or before 12^th February 2026. Copy of the same be served on the respective advocates for Petitioners well in advance.

7. Considering the averments as made in the petitions and after hearing the learned counsel for the parties, we are of the opinion that an ad-interim protection needs to be granted to the Petitioners. We accordingly order that there shall be an ad-interim stay to the respective impugned orders, subject matter of each of the Writ Petitions till the adjourned date of hearing. Stand over to 18^th February 2026 at 3.00 p.m.