Source: Entrackr
The Bombay High Court has quashed a ₹170.29 crore GST demand against Go Digit General Insurance and ordered the tax department to reconsider the case. This is a significant relief for the company, which just went public months ago.
An assessment was raised by the Chennai South GST & Central Excise Commissionerate for ₹154.8 crore as tax dues and ₹15.48 crore as penalties, relating to events that occurred between July 2017 and March 2022.
Go Digit, in its submission to the National Stock Exchange (NSE), said the High Court noted the issue had already been addressed by the GST Council and that it had issued circulars on this sort of transaction. The Court stated that the official guidance provided should be taken into account by the tax department when they consider the case again.
The court has mandated the GST department to carry out this new review within three months. Go Digit also said that it is waiting for the official court order and will decide its next steps in the legal process once it receives the order.
No Financial Implications Right Away
According to a company spokesperson, this does not affect the company directly, as it is a wider issue for the entire insurance industry. Because there is no financial impact on the company at this point in time from the High Court’s ruling.
This tax demand was previously noted in the “Material Tax Proceedings” section of Go Digit’s Red Herring Prospectus (RHP) during its preparations for its initial public offering (IPO).
Robust Financial Results
Despite the large legal hurdle, Go Digit has demonstrated tremendous growth in the business. In the last quarter of the FY25 financial year, the company registered net profits that were 2.2 times larger, at ₹116 crore. Over the FY25 financial year, profits were up 133% at ₹425 crore.
At 11:25 AM on July 7, the company’s stock price was ₹333.9, giving it an overall market capitalization of approximately
₹30,828 crore or $3.6 billion.
The respective ruling is notable for not only Go Digit, but the whole insurance sector. This ruling is a pivotal moment for the insurance industry, emphasizing the significance of the GST Council to ensure appropriate tax assessments. The ruling also evidences the judiciary’s commitment to providing consistent and equitable treatment throughout the industry.
