Eternal Gets INR 128 Cr GST Demand, Penalty Notice

Adding to its tax troubles, Zomato and Blinkit parent Eternal has now received a GST demand order totalling INR 128.4 Cr, including a demand of INR 64.2 Cr and a penalty of INR 64.2 Cr, from state tax authorities in Uttar Pradesh (UP).

The order, issued by the Deputy Commissioner, State Tax, Lucknow, cites alleged short payment of output tax and excess availment of input tax credit, and includes an interest and an equivalent amount of penalty.

“…the Company has received an order on October 18, 2025 for the period April 2023 to March 2024 passed by Deputy Commissioner, State Tax, Lucknow, Uttar Pradesh confirming demand of GST of INR 64.2 Cr with interest as applicable and penalty of INR 64.2 Cr,” the company said in an exchange filing on October 19 (Sunday). 

The company plans to contest the order, stating it “has a strong case on the merits and will file an appeal before the appropriate authority.” 

The latest demand adds on to the tax woes that Eternal has been facing in recent times. Here’s a snapshot of the company’s tax-related troubles over the past few years:

• Eternal saw its largest GST demand of INR 401.7 Cr from Maharashtra tax authorities at the end of 2023.
• In May 2024, Delhi authorities issued a GST notice of INR 2.2 Cr.
• In August 2024, Tamil Nadu served a GST demand of INR 4.6 Cr.
• In September 2024, West Bengal issued a GST notice of INR 17.7 Cr.
• In December 2024, Maharashtra served another large GST demand of INR 803.4 Cr.
• In August 2025, Uttar Pradesh raised a GST notice of INR 1.3 Cr.
• In August 2025, Karnataka authorities issued a GST demand of INR 40 Cr.

The tax demand from UP came shortly after the company disclosed its financial results for Q2 FY26. The company’s consolidated net profit for the quarter declined 63% YoY to INR 65 Cr from INR 176 Cr in the year-ago quarter. 

Meanwhile, its operating revenue jumped 183% to INR 13,590 Cr in Q2 FY26 from INR 4,799 Cr in the year-ago quarter. On a QoQ basis, operating revenue grew 90% from INR 7,167 Cr. 

Gurugram-based Eternal has grown beyond food delivery to a diverse portfolio encompassing Zomato, quick commerce platform Blinkit, B2B restaurant supplies, Hyperpure, and event and movie businesses (formerly from Paytm). 

In the quarter under review, its quick commerce business took the center stage, reporting a significant 9x YoY revenue increase, reaching INR 9,891 Cr, up from INR 1,156 Cr in the same period last year. This surge is attributed to Blinkit’s shift from a marketplace model to an inventory-led model, allowing for greater control over operations and product offerings. Additionally, the company’s rapid expansion of dark stores—local warehouses that enable quick delivery—has fueled this growth but also led to a rise in capital expenditure. 

Meanwhile, its erstwhile bread and butter food delivery business, Zomato, continued to struggle growing further. CEO Deepinder Goyal attributed it to multiple challenges, including muted discretionary spending in India and increasing pressure from the quick commerce segment boom.

Another such headwind is GST 2.0 as the GST Council finally introduced a new category called “local delivery services”. Under the new rules, the foodtech companies now need to pay 18% GST on delivery charges whenever the delivery partner isn’t GST-registered. The 18% GST now applies to delivery fees charged to customers, affecting roughly a quarter of Zomato’s orders — the ones where delivery isn’t free.

Eternal’s CFO Akshant Goyal in the Q2 shareholder letter disclosed that Zomato has seen a slight negative impact on order growth, as the platform has chosen to pass this extra tax burden on to customers. 

Shares of Eternal closed the Muhurat Trading session yesterday 0.04% lower at INR 338.05.