Zomato Slapped With Over INR 4 Cr GST Demand, Penalty Orders

Listed foodtech major Zomato has been slapped with tax demand and penalty orders of more than INR 4.59 Cr related to goods and services tax (GST).

In a regulatory filing, the company said that the Assistant Commissioner of GST and Central Excise, Nungambakkam Division, Tamil Nadu passed an adjudication order, raising the GST demand of INR 81.16 Lakh, with applicable interest (not quantified) and a penalty of INR 8.21 Lakh.

The Deepinder Goyal-led company said that the demand order relates to “excess availment of input tax credit and interest, penalty thereon”.

Additionally, Zomato has also received a tax demand order of INR 1.92 Cr with interest of INR 1.58 Cr and penalty of INR 19.24 Lakh from the Assistant Commissioner of Revenue, Government of West Bengal for failure to pay GST on delivery charges and interest, the filing showed.

The GST demand notices were issued for the April 2019-March 2020 period.

“The company in its response to the show cause notice had clarified on the issue along with relevant factual submissions/ reconciliations and judicial precedents, which appears to not have been appreciated by the authorities while passing the order,” the exchange filing added.

Zomato said it plans to file an appeal against the orders before the relevant appellate authority and does not expect any financial impact on the company due to the tax penalty.

It is pertinent to note that Zomato is already grappling with multiple such tax issues. Last month, the foodtech major received an INR 9.45 Cr GST notice from the Assistant Commissioner of Commercial Taxes (Audit) in Karnataka.

Prior to that, in April, the food delivery giant was slapped with a tax demand and penalty order of INR 11.8 Cr from Gurugram GST authority.

Despite the crackdown by GST authorities, shares of Zomato have been rallying for over a year now. The stock has skyrocketed more than 102% year-to-date on the back of strong financial performance. 

On Thursday, shares of Zomato ended 0.5% lower at INR 251.75 apiece on the BSE.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.