The sudden flurry of GST demand notices is sending more and more businesses into a tizzy.

The latest to be hit by the whirlwind is general insurer ICICI Lombard General Insurance Company (ICICI Lombard) which has received a tax demand of Rs 1,728 crore.

The notice pertains to unpaid GST “on the Co-insurance premium accepted as follower in case of co-insurance transactions and non-payment of GST on re-insurance commission accepted on the reinsurance premium ceded to various Indian and Foreign reinsurance companies during the period July 2017 to March 2022”.

What is clear is that the tax authorities have started an exercise to gouge taxes from companies and businesses that were not taxed on the assumption of exemption because of a lack of clarity in the law or because the authorities are only now waking up to their own lapses.

The notice – issued under section 73(1) of the Central GST Act — to ICICI Lombard could soon hit other insurance companies.

The section relates to tax not paid, short paid, erroneously refunded or input tax credit wrongly availed.

It says: “Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful mis-statement or suppression of facts to evade tax, he shall notice on the person chargeable…to show cause as to why he should not pay the amount specified in the notice along with interest."