Plea in Kerala HC accuses Star Health of profiteering, not reducing insurance premium despite GST exemption

The Kerala High Court on Friday issued notice on a petition raising concerns about whether the Central government's recent decision to exempt individual health insurance policies from goods and services tax (GST) is actually being implemented [Lawrence Joseph v Union of India & ors].

In particular, the petitioner has accused his health insurance provider, Star Health and Allied Insurance Company Limited, of profiteering by failing to reduce the premium payable after the GST exemption came into effect.

The petitioner, an Ernakulam resident named Lawrence Joseph, says that the premium that he used to pay before the GST exemption came into force is nearly identical to the premium he was asked to pay after the exemption.

In this way, the petitioner argues that the insurance company has failed to pass on the benefit of the tax exemption to policyholders, even after the GST on individual health insurance policies was reduced to zero in September 2025.

Among other prayers, his plea seeks directions for the strict enforcement of anti-profiteering provisions under the GST laws.

Justice Ziyad Rahman AA on Friday sought a response from the Central government, the GST authorities and Star Health.

The petitioner is a proprietor of a law book agency near the Kerala High Court, who has been subscribing to a family floater health insurance policy issued by Star Health, for himself and his spouse since 2017.

According to the petition, his insurance premium before September 2025, for the policy period of 2023-2024, was ₹37,906, which included GST at the rate of 18 per cent - amounting to ₹5,782 on the base premium.

On September 17, 2025, the Central government issued a notification (Notification No 16/2025), granting complete GST exemption on individual life and health insurance policies with effect from September 22, 2025.

However, the petitioner contended that despite the exemption, the insurance company demanded and collected a premium of ₹37,103 for the policy period commencing from November 9, 2025, which was almost identical to the premium charged earlier when GST was applicable.

This shows that the tax reduction benefit has not been passed on to the policyholder, the petitioner points out.

The petitioner has further contended that this also amounts to unjust enrichment and profiteering as the insurance company has unlawfully retained the tax benefit instead of passing it on to its policyholder. This goes against the GST laws as well, the plea highlights.

"..the failure of the Respondent to correspondingly reduce the premium after the removal of GST amounts to illegal retention of tax benefit, unjust enrichment, and profiteering, directly contrary to the express mandate of Section 171 of the Central Goods and Services Tax Act, 2017," the petition added.

In this regard, the petitioner noted that Section 171 of the Central Goods and Services Tax Act, 2017 (CGST Act) deals with anti-profiteering measures. This provision clearly mandates that any reduction in the rate of tax must be passed on to consumers by businesses by lowering the price of their goods and services accordingly.

The petition also referred to Rule 127 of the CGST Rules which empowers authorities to determine whether tax benefits had been passed on to customers or consumers.

The petitioner has flagged the inaction of the Central government and GST Council in ensuring the proper enforcement of such anti-profiteering provisions. This inaction is arbitrary and violates Articles 14 (right to equality) and 21 (right to life) of the Indian Constitution, the plea adds.

The petitioner has, thus, urged the Court to declare that collecting insurance premiums without passing on GST exemption benefits to the policyholders is illegal and arbitrary.

He has also called on the Court to direct the authorities to properly enforce anti-profiteering provisions.

A direction is also sought for Star Health to refund the excess premium that was collected from the petitioner, along with interest.

Advocates Raghul Sudheesh, J Lakshmi, Ambily T Venu, Rachel Mary Jacob, Athulya Vaishnavi and Navaneeta Manu represented the petitioner.