As promised we're here with our inaugural edition, chief!

We present to you the inaugural edition of our exclusive newsletter, The CFO Weekly Digest, designed for CFOs and business leaders to receive valuable and actionable insights straight to their inbox—without the fluff.

This week we bring you the story of a small company fighting the tax department over arbitrary cancellation of its GST registration. It wasn’t at all going well for the company till it decided to approach the court. And that’s when the magic happened.

The Delhi High Court this week unequivocally reprimanded the GST department, saying that the registrations of companies cannot be cancelled only on the basis of “because we said so”; a strong, justifiable reason is also needed.

The company’s fight for its existence over baseless claims led the court to convey a firm message to the taxmen: Prove your claim or stand down.

This judgement is an important victory for entrepreneurs who are forced to navigate several bureaucratic landmines. For companies that have experienced similar problems, this ruling provides a strong precedent—one that may encourage tax authorities to resolve disputes more wisely, and reduce the possibility of high-handed moves.

Allow us to break it down for you so you know not only what occurred, but why it matters..

Show Proof or Back Off

One fine morning, Rashid, the proprietor of MS Enterprises, received a notice from the GST department, informing him that his company’s registration was cancelled. 

What Happened?

• MS Enterprises first received a notice in November 2023, alleging that the company was not operating from its registered business address, and it was illegally passing on input-tax credit without supplying goods or services.

• The company was served a similar notice in August 2023, which was invalidated after Rashid submitted a response.

• Despite that, the GST department went ahead and cancelled his registration.

Thankfully, the Delhi High Court intervened to give the tax department a reality check.

What The Court Said:

The high court pointed out in its ruling that the cancellation order did not give specific reasons, and even a verification round done by a GST Inspector did not find any problems with the business concerned. Additionally, the tax department cited in its notice a CGST letter from November 22, 2023, but never shared it with the company before passing the cancellation order.

The Verdict

Justices Prathiba M Singh and Dharmesh Sharma ruled that:

• The company’s GST registration should be reinstated. 

• The tax department must provide the missing CGST letter within four weeks.

• The company must be heard before any further action.

Why This Matters

This case clearly sets a landmark precedent: Tax authorities cannot arbitrarily cancel GST registration just on the basis of hunch. 

The ruling also reiterates a long-standing grouse that procedural lapses do torment honest taxpayers even as they derail legitimate businesses.

If someone is facing an unwarranted GST cancellation, this red-hot ruling sets a strong basis for challenging it.

Until next week—keep your taxes low and your compliance clean!

₹2,00,00,00,00,000

Don’t be overwhelmed. That’s ₹2 lakh crore. That’s the amount Tata Motors has lost in market capitalisation in the current decline in the stock market. In fact, Tata Motors has become the worst-performing stock on the Nifty 50 index, with its shares plummeting by about 45% from a peak of ₹1,179 in July 2024 to ₹648.5. The slump, market experts say, is primarily attributed to weak demand for its UK-based subsidiary, Jaguar Land Rover, particularly in key markets such as China, the UK, and the EU.

— The Supreme Court has introduced necessary safeguards against coercive actions under the Central Goods and Services Tax Act and the Customs Act, ruling that authorities must establish “reasons to believe” before initiating proceedings, ensuring that arrests are not made arbitrarily. A three-judge bench comprising Chief Justice of India Sanjiv Khanna and Justices M.M. Sundresh and Bela M. Trivedi held that individuals accused under GST and customs laws would be entitled to the same legal protections as those accused under criminal law.

— Tax authorities are asking foreign private equity houses and their local arms to disclose the share of profits, known as 'carry', that fund managers and employees receive when a fund outperforms, or pay significantly higher fees to the advisory arms set up here. Carry data is usually confidential, and fund houses do not disclose profit-sharing details. Offshore PE and venture capital funds, usually based in tax-friendly countries, operate advisory entities in India. The department is focusing on advance pricing agreements and renewals, with some companies agreeing to higher mark-ups but withholding carry information. The tax office sees transfer pricing as a way to prevent tax avoidance.

— Life Insurance Corporation of India has been served a tax notice of about Rs 57.2 crore on it for excess Input Tax Credit (ITC) availed for the financial year 2020-21. The company has received a demand order on February 24 regarding excess ITC availed, the company said in a regulatory filing. The financial impact of the demand is to the extent of the GST (Rs 31.04 crore), Interest (Rs 23.13 crore) and Penalty (Rs 3.1 crore). There is no material impact on financials, operations or other activities of the corporation, it added.

— The government has asked private insurers to increase the free-look period for policyholders from one month to a year. The free-look period is the length of time during which a customer can cancel an insurance policy without paying surrender charges. Last year, the insurance regulator increased the period to 30 days from 15 days.The insurer will have to refund the first premium paid if the policyholder returns the policy within the period.

— Indian Overseas Bank has appointed Madhaw Chandra Jha as the chief financial officer with effect from March 1, 2025.The bank informed that S P Mahesh Kumar, general manager & CFO is superannuating on 28 February 2025. Jha, a qualified chartered accountant with rich experience in the field of accounting and finance, has been working with the bank for the past 19 years, and has handled various functions such as overseeing financial operations, and liaising with statutory auditors.

— Digital payments firm Paytm has teamed up with US-based Perplexity to bring AI search to its app. This means users can now get real-time information, ask questions, and make better financial choices within the platform. Paytm says this move is to keep up with growing digital demand. The AI search will work in local languages, making it easier for people to use. Founder Vijay Shekhar Sharma said AI is changing how people get information. He said this will make financial services simpler and more accessible for millions in India..

Was this email forwarded to you?

The CFO Weekly Digest is a weekly newsletter brought to you in collaboration with The Core.