Zomato Gets INR 23 Cr Tax Notice From Karnataka Authority

Fooodtech major Zomato has received a goods and services tax (GST) notice of INR 23.26 Cr for financial year 2018-19 (FY19) from Karnataka tax authorities, the company has said in a regulatory filing.

The order demands a GST payment of INR 11.27 Cr along with additional interest and penalty charges totalling INR 23.26 Cr.

“Pursuant to Regulation 30 of the Listing Regulations, this is to inform that the Company has received an order for FY 2018-19 pursuant to the audit of GST returns and accounts by the Assistant Commissioner of Commercial Taxes (Audit), Karnataka raising demand of GST of INR 11,27,23,564, along with applicable interest and penalty totaling to INR 23,26,64,271,” the company said.

The Deepinder Goyal-led company also added that it received the order from the authority on March 30, which relates to overutilisation of input tax credit and interest, penalty thereon.

Zomato said that despite responding to the show cause notice, which included clarifications supported by pertinent documents and legal precedents, the authorities did not fully consider this information when issuing the order.

Hence, Zomato is planning to challenge the order before the appropriate authorities. “The company believes that it has a strong case to defend the matter before the appellate authority and does not expect any financial impact on the company,” the company added.

This comes at a time when Zomato is already grappling with tax issues. Last month, the foodtech major received a GST penalty notice from Gujarat’s Deputy Commissioner of State Tax, pertaining to fiscal 2018-19. The company had been asked to pay INR 4,11,68,604 for GST, along with additional interest and penalty charges totalling INR 8,57,77,696.

Back in December, 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 between October 29, 2019 and March 31, 2022.

Back then the company said it “strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners.”

Zomato reported its second consecutive profitable quarter, with profit after tax surging to INR 36 Cr during the September quarter of the financial year 2023-24 (FY24). This was an 18X jump from PAT of INR 2 Cr in the preceding quarter.

Zomato shares opened at INR 182.35 on Monday (April 1).