Zomato Gets INR 11.8 Cr GST Demand, Penalty Order Over Export Services

Foodtech major Zomato has received a fresh goods and services tax (GST) notice of INR 11.8 Cr from Gurugram GST authority.

The order consists of INR 5.9 Cr GST demand and a penalty of INR 5.9 Cr.

The company received the tax order for the period July 2017 to March 2021 passed by the additional commissioner, central goods and services tax, Gurugram, raising demand of GST of INR 5,90,94,889 with applicable interest and penalty of INR 5,90,94,889, it said in an exchange filing on Friday (April 19).

The new tax penalty on Zomato comes weeks after the company received two back-to-back tax notices of INR 23 Cr and INR 92 Cr from the Karnataka tax authority earlier this month.

In the filing, Zomato said that the latest demand order was pertaining to the GST on export services provided by the company to its subsidiaries located outside India between July 2017 and March 2021.

Zomato said that it has received the demand order “by upholding that such services do not fulfil the conditions for the supply to qualify as export of service under GST”.

“The company in its response to the show cause notice had clarified on the allegations along with supporting documents and judicial precedents, which appears not to have been appreciated by the authorities while passing the order,” the exchange filing noted.

Zomato does not expect any financial impact on the company due to the tax penalty.

It is pertinent to note that when Zomato is already grappling with multiple such tax issues. The foodtech major received a GST penalty notice from Gujarat’s Deputy Commissioner of State Tax for the fiscal 2018-19 in March. 

In December last year, Zomato received an INR 401.7 Cr show cause notice from the Directorate General of GST Intelligence, Pune Zonal Unit, over unpaid tax on delivery charges collected from the customers, for the period of October 29, 2019, to March 31, 2022.

Meanwhile, these tax notices seem to have hardly affected the company’s stock performance. Zomato shares have witnessed strong momentum over the last few months on the back of its strong financial performance and D-Steet’s bullish estimates on Blinkit’s mid to long-term growth.

Shares of Zomato have gained almost 53% year to date and are currently trading at INR 189.2 on the BSE.

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