Finance Ministry has reportedly refused to act on insurers plea seeking for relief in the penal action the industry is facing penal action for violation from tax authorities for Goods and Services Tax (GST) input tax credit violations, The Economic Times reported an official.

The Finance Ministry has referred the matter to Insurance Regulatory and Development Authority of India (IRDAI). The matter pertains to tax evasion to the tune of Rs 2,000 crore by insurers and intermediaries, ET reported citing people aware of the matter.

The insurance industry had approached the Finance Ministry last month seeking a lenient view of the industry-wide commission practice and not to treat these violations as wilful evasion. 22 insurers and and intermediaries signed and sent a letter to the department and also sought relief from summonses and large penalties imposed on them.

“We cannot interfere in the investigation and if there is an issue regarding commissions, Irdai is the authority, so they were referred to approach it,” an official told ET.

The taxman has alleged that insurance companies availed input tax credit (ITC) without underlying supply of goods and services based on fake bills provided insurance intermediaries.

Meanwhile, insurance companies defended themselves by saying that commissions paid to intermediaries are not uniform.

The Economic Times had fist reported about investigations into potential GST input tax credit violations by insurers in September last year. Similar probes were carried out by the income tax department on January 24.