ICICI Prudential Life Insurance, one of India’s leading life insurance companies, has recently found itself in a legal entanglement with the Maharashtra State Tax Department. The department has issued a significant order demanding the payment of Rs 835 crore in Goods and Services Tax (GST) and penalties for the financial year 2019. The order highlights various infractions, including input tax credit reversals, discrepancies in ITC reporting, failure to pay taxes on the sale of fixed assets, and interest on delayed GST payments.

1. Input Tax Credit Reversals: ICICI Prudential Life Insurance is accused of improperly reversing input tax credits, contrary to GST regulations. Input tax credit reversal is a critical aspect of GST compliance, and any discrepancies in this process can lead to substantial financial liabilities.

2. Mismatch in ITC Reporting: The order highlights disparities in the reporting of Input Tax Credit (ITC) across various GST filings, including GSTR-3B, GSTR-9, and GSTR-2A. Such inconsistencies raise questions about the accuracy and integrity of the company’s tax reporting practices.

3. Non-Payment of Tax on Fixed Asset Sales: Another area of contention is the alleged failure to pay taxes on the sale of fixed assets. GST regulations mandate the payment of taxes on all taxable supplies, including the sale of assets, and non-compliance in this regard is considered a serious offence.

4. Interest on GST Payment: Additionally, the order includes provisions for interest on delayed GST payments. Timely payment of GST is crucial for maintaining compliance and avoiding financial penalties, and any delays in this regard can result in significant interest liabilities.

ICICI Prudential Life Insurance has officially disclosed the receipt of the GST and penalty order from the Maharashtra State Tax Department. According to the company’s statement to the stock exchanges, the GST component of the order amounts to Rs 380 crore. Meanwhile, penalties and interest levied stand at Rs 416 crore and Rs 38 crore, respectively.

In response to the order, ICICI Prudential Life Insurance stated, “The Authority has demanded GST along with applicable interest and penalty for FY2019.” The company acknowledges the allegations of violations, which include the aforementioned issues related to input tax credit reversal, ITC reporting discrepancies, non-payment of taxes on fixed asset sales, and interest on delayed GST payments.

The crux of the matter revolves around compliance with GST regulations. The Maharashtra State Tax Department alleges that ICICI Prudential Life Insurance failed to adhere to several key provisions of the GST law, leading to substantial financial implications. These alleged violations span multiple aspects of GST compliance, indicating a systemic failure to meet regulatory requirements.