Star Health and Allied Insurance Company found itself in the spotlight as it received a significant notice from the Directorate General of GST Intelligence (DGGI) concerning a tax liability amounting to ₹38.99 crore. This development was disclosed in the company's filing on the Bombay Stock Exchange (BSE) on Monday.
In the official statement, Star Health and Allied Insurance acknowledged the receipt of a "Show Cause Cum Demand Notice" from the Directorate General of GST Intelligence, specifically from the Mumbai Zonal Unit. The notice was issued under Section 74(5) of the Central Goods and Services Tax Act, 2017, and it pertains to an alleged tax demand of ₹38,99,77,849.
As a consequence of this notice, the company's shares experienced a 2.11% decline, closing at ₹582.55 per share on the BSE on Monday. The tax demand arose from the "non-payment of GST liability on the premium received by the company as a follower insurer under a coinsurance arrangement during the period from July 2017 to March 2023."
The company clarified its intent to respond to the GST show cause notice within the stipulated timeframe. Star Health and Allied Insurance Company's shares have seen a 0.63% decline Year-to-Date (YTD) and a notable decrease of 19.12% over the past year.
This is not the first time the insurance firm has faced tax-related issues. In August, the private sector health insurance company received a notice from the GST department in Chennai, demanding ₹104 crore in taxes due to discrepancies in returns filed during the fiscal year 2019-20. The discrepancies were related to various aspects, including output mismatch, input mismatch, and variations in ineligible tax credits (ITC), as outlined in the company's official filing.
Notably, another player in the insurance industry, Reliance General Insurance Company (RGIC), recently found itself in a similar situation. RGIC received multiple show cause notices for Goods and Services Tax (GST) dues amounting to ₹922.58 crore, with one of the notices pertaining to a GST liability of ₹478.84 crore. This notice revolved around tax payments associated with reinsurance commissions booked through reinsurance services provided to both Indian and foreign entities.
CAclubindia
