Zomato Gets INR 803 Cr GST Demand, Penalty Notice

Foodtech major Zomato has received yet another GST demand notice, this time for INR 401.70 Cr. Besides the GST demand, the company has been asked to pay the applicable interest on INR 401.70 Cr and pay an equal amount as penalty. 

In an exchange filing, the company said that the joint commissioner of CGST & central excise of Thane Commissionerate issued the demand notice for non-payment of GST on delivery charges. 

Zomato said it will file an appeal against the notice to the appropriate authority as it believes it has a strong case on merits. “We believe that we have a strong case on merits which is backed by opinions from our external legal and tax advisors,” the company said.

The GST demand and penalty totals to INR 803.4 Cr, excluding interest. This amount is more than double of the INR 351 Cr net profit Zomato reported in the financial year 2023-24 (FY24).

The foodtech major posted a net profit of INR 176 Cr in the September quarter of the ongoing fiscal year.

It is pertinent to mention that Zomato received multiple GST demand notices from authorities in Karnataka, Haryana, and Gujarat earlier this year. 

It last received a GST demand and penalty order of over INR 17.70 Cr from West Bengal GST authorities in September. Earlier in the month, it had received a GST notice of INR 9.85 Cr from the same authority in West Bengal. 

Following receipt of each of these GST demand notices, Zomato said it believes it has a strong case and will file an appeal. However, there have been no further developments on the issue. 

Zomato’s rival Swiggy has also been plagued by the same issue. As per its updated draft red herring prospectus, Swiggy was facing potential GST liabilities to the tune of INR 326.7 Cr. 

Tax authorities in Pune had issued a demand notice to the company for allegedly not paying tax on the delivery fee collected from customers between July 2020 and March 2022. 

For Zomato, the latest development comes shortly after it raised INR 8,500 Cr (around $1 Bn) through its first qualified institutional placement (QIP) in late November. 

Shares of Zomato ended Thursday’s (December 12) trading session 2.36% lower from the previous close at INR 284.90. 

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