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The relief was granted by a division bench of Justice GS Kulkarni and Justice Aarti Sathe, which stayed the impugned orders until the next date of hearing on February 18, 2026.
Who moved the court: A cross-section of insurers
The batch of writ petitions was filed by a wide cross-section of India’s insurance industry, spanning public sector insurers, private general insurers and health insurance companies. The petitioners include Aditya Birla Health Insurance Co. Ltd, Oriental Insurance Co. Ltd, SBI General Insurance Company Ltd, IFFCO Tokio General Insurance Co. Ltd, Generali Central Insurance Co. Ltd, Universal Sompo General Insurance Co. Ltd,
Collectively, these entities account for a substantial share of India’s general and health insurance market, underscoring the sector-wide implications of the dispute.
What triggered the GST demands
The controversy arises from adjudication orders passed by the Additional Commissioner of Central GST and Central Excise, Palghar Commissionerate, confirming GST demands on co-insurance premium and ceding commission paid in reinsurance arrangements.
The tax department’s position has been that such transactions constitute independent taxable supplies under GST, warranting levy of tax along with interest and penalties. Insurers, however, have consistently maintained that co-insurance and reinsurance are intrinsic risk-sharing mechanisms within the insurance ecosystem and do not involve any separate supply of service liable to GST.
The demands, raised across multiple assessment periods, cumulatively run into over ₹10,000 crore, making it one of the most consequential GST disputes faced by the insurance industry since the rollout of the tax.
Circulars and GST Council decisions at the heart of the case
Appearing for the insurers, senior advocates Arvind Datar and Rohan Shah argued that the impugned demands are per se contrary to binding circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) on October 11, 2024 and January 28, 2025.
These circulars were issued pursuant to a decision taken by the GST Council, which clarified that co-insurance premium and ceding commission are not liable to GST and sought to regularise past disputes on an “as-is-where-is” basis. The circulars were intended to put to rest long-standing interpretational differences between the industry and tax authorities.
The petitioners also pointed out that in at least six similar cases across Meerut, Delhi, Pune and Mumbai jurisdictions, departmental authorities had already dropped identical demands in line with the CBIC clarifications. In contrast, the adjudication orders under challenge adopted a diametrically opposite approach, despite the existence of clear circular-based guidance.
Court’s observations and interim protection
Taking note of the submissions, the High Court observed that the GST Council has been impleaded as a party to the proceedings, reflecting the broader institutional importance of the issue. The bench directed the Revenue to place on record the orders in which similar demands had been dropped by GST authorities, as sought by the petitioners.
After hearing the parties, the court held that an ad-interim protection was warranted. It ordered 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.” The Revenue has been directed to file its reply affidavits by February 12, 2026.
Why the ruling matters for the insurance sector
Tax experts say the interim stay comes at a critical juncture for the insurance sector, which has been facing mounting compliance uncertainty and potential cash flow disruption due to large, disputed GST liabilities.
Amit Maheshwari, Managing Partner at AKM Global, said the High Court’s intervention reinforces the primacy of GST Council-backed clarifications.
“The ad-interim stay by the Bombay High Court comes at a critical juncture for the insurance sector, offering immediate relief from substantial GST demands that have clouded industry operations,” he said.
“The GST Council had already recommended a clear position on co-insurance premium and ceding commission, which was subsequently implemented through CBIC circular clarifications. The order reinforces that such circular-based guidance cannot be disregarded in assessment proceedings,” Maheshwari added.
He also highlighted the inconsistency in departmental action.
“The petitioners have pointed out that in several similar cases the department itself dropped demands in line with the circulars, while the impugned orders take a contrary view. The stay will help preserve cash flows and underscores the importance of consistent implementation of the circular, while the broader legal issue is being examined on merits,” he said.
What lies ahead
While the stay provides immediate relief, the final outcome of the case will be closely watched by insurers, reinsurers and tax administrators alike. A definitive ruling could settle, once and for all, the GST treatment of co-insurance and reinsurance transactions — an issue that has lingered for years and carried significant financial exposure for the industry.
For now, the Bombay High Court’s order offers insurers a crucial pause, ensuring that recovery proceedings remain in abeyance as the larger legal questions are examined in detail.
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