Bombay High Court Grants Major Interim Relief to Insurance Firms in Rs. 10,000 Crore GST Recovery Case

The Bombay High Court has given significant relief to India’s insurance industry by putting a stay on the recovery of GST (Goods and Services Tax) demands amounting to more than Rs 10,000 crore for a temporary period. This demand has been raised against 13 leading insurance companies by the GST authorities. By granting a temporary stay, the court has paused any recovery action for now, giving insurers some relief from ongoing tax pressure and uncertainty.

This relief has been granted by the Bombay High Court, division bench comprising Justice GS Kulkarni and Justice Aarti Sathe, which has put a stay on the impugned orders till the scheduled date of the next hearing, i.e., February 18, 2026.

The court noted that the GST Council has been added as a party in the case, showing that the matter is important at a national level. The Revenue Department has been asked to submit its written reply by February 12, 2026.

A group of writ petitions have been filed by many major insurance companies in India. The following are the names of the companies involved:

The key dispute is regarding the GST demands imposed by the Additional Commissioner of Central GST and Central Excise, Palghar Commissionerate, on co-insurance premiums and ceding commissions paid in reinsurance arrangements.

The tax authorities believe these payments are separate taxable services, so GST should be charged along with interest and penalties. However, insurance companies disagreed and argued that co-insurance and reinsurance are just ways to share risk between insurers and do not involve separate supply services, and therefore, GST should not apply. These GST demands cover multiple years and together exceed Rs. 10,000 crore, making it one of the largest GST disputes in the insurance sector.

The main argument raised by the petitioners is that the levied GST demands are directly going against the CBIC circulars dated October 11, 2024 and January 28, 2025, which were based on decisions of the GST Council. The GST Council has also been made a party in the case.

Further emphasised that six similar cases handled by jurisdictional officers in Meerut, Delhi, Pune, and Mumbai have already withdrawn such GST demands. One of these official orders has been submitted as evidence to support their claim.

When the court analysed the facts of the case and heard arguments from both sides, it believed that the petitioners should be given temporary protection. Hence, the court in the final ruling held that all the orders challenged in each petition will be stayed for a temporary period until the next hearing date, scheduled for February 18, 2026, at 3:00 p.m.