The jurisdictional limits of retrospective taxation in the GST regime have come under sharp judicial scrutiny, with the Bombay High Court granting a blanket stay on tax demands raised against several of India’s largest general insurers over insurance policies sold to Special Economic Zone units between 2017-18 and 30 September 2023. The Division Bench of Justice G.S. Kulkarni and Justice Farhan P. Dubash, hearing a batch of writ petitions led by ICICI Lombard General Insurance Co. Ltd. (W.P. No. 7806/2025 & Batch), found prima facie merit in the insurers’ central contention — that the designated officer simply had no jurisdiction to reach back in time and impose GST on transactions that the law had, at the relevant time, classified as zero-rated.
The dispute traces its origin to a legislative amendment that took effect on 1 October 2023. Prior to that date, Section 16 of the IGST Act treated all supplies made to SEZ units as zero-rated without qualification. The Finance Act, through Notification No. 27/2023-Central Tax dated 31 July 2023, introduced the limiting phrase “for authorised operations” into Section 16, effective from 1 October 2023 onwards. The Revenue’s position, as articulated through the impugned show cause notices and assessment orders, was that this amendment was merely clarificatory in nature — a legislative exposition of what the law had always meant — and that insurance policies purchased by SEZ units for the benefit of their employees had never truly qualified as supplies for authorised operations. On this reasoning, the department sought to recover GST for the entire period stretching back to the inception of the GST regime in 2017-18.
The insurers — a consortium that included ICICI Lombard, HDFC Ergo, Bajaj Allianz, IFFCO Tokio, SBI General Insurance, and others — mounted a frontal challenge to this characterisation. Their argument, advanced by Senior Advocates Vikram Nankani (instructed by Pythogoras Legal, with Advocates Prithwiraj Choudhari and Aansh Desai) and Rohan P. Shah (with Harish Bindumadhavan, Mahir Chablani, Prathamesh Gargate, and Dimpal Jangaid), alongside Advocate Sriram Sridharan (with Shanmuga Dev and Aditi Jain), was straightforward: until the amendment came into force, the statute drew no distinction between types of supplies to SEZ units, and the entire category enjoyed zero-rated status as a matter of law, not administrative concession. To reclassify those supplies retrospectively, the insurers contended, would amount to imposing a tax liability that did not exist at the time the transactions occurred — a fundamental jurisdictional impossibility.
The Bench found considerable force in this submission. In its prima facie assessment, the Court observed that the designated officer would lack jurisdiction to retrospectively levy tax on the supply in question, namely the sale of insurance policies to SEZ units, for the period preceding the amendment. Having determined that the petitions raised arguable issues warranting full adjudication, the Court directed that all impugned orders arising from the challenged show cause notices shall remain stayed pending the hearing and final disposal of the petitions. The Revenue, represented by Advocates Yogendraprasad Ramdin Mishra, Siddharth Chandrashekhar, Ram Ochani, Jitendra B. Mishra, Karan Adik, and their respective teams, was directed to file reply affidavits within four weeks, with liberty to all parties to move for final hearing thereafter.
The interim order carries significance well beyond the immediate tax demands at stake. At its core, the case tests a principle that sits at the intersection of fiscal law and constitutional governance — whether Parliament’s power to amend a taxing statute carries within it the power to recharacterise past transactions through the device of calling an amendment “clarificatory.” The Revenue’s attempt to treat the October 2023 amendment as declaratory rather than substantive, if sustained, would have permitted the department to effectively nullify the zero-rated treatment that SEZ units and their suppliers had legitimately relied upon for over six years. The Bombay High Court’s willingness to intervene at the interim stage signals a judicial reluctance to endorse that approach, and the final outcome of these petitions could establish an important marker on the boundaries of retrospective fiscal action under the GST architecture — particularly for industries such as insurance, banking, and professional services that supply to SEZ units in ways that do not always map neatly onto the “authorised operations” framework the 2023 amendment introduced.