[Update] Zomato To Appeal Against INR 9.85 Cr GST Order From Bengal

Update | September 14, 1:02 PM

After informing the bourses that it will pay the GST dues in West Bengal, foodtech major Zomato has filed a fresh corrigendum stating that it will be contesting the decision passed by the Assistant Commissioner of Revenue, Government of West Bengal

“The Company believes that it has a strong case on merits and the Company will be filing an appeal against the order before the appropriate authority,” Zomato said, correcting its prior communication that it would pay INR 9.85 Cr to settle the GST case.

Original Story | September 13, 8:18 PM

Already fighting a plethora of goods and services tax (GST) notices, foodtech major Zomato has decided to settle a case with West Bengal GST authorities by paying INR 9.85 Cr.

In an exchange filing, Zomato said it received an adjudication order on August 12 from the Assistant Commissioner of Revenue, Government of West Bengal pertaining to April 2020 to March 2021 period for GST demand of INR 5.59 Cr.

Besides the GST, Zomato was asked to pay an interest of INR 3.69 Cr and a penalty of INR 55.95 Lakh for non-payment of GST on delivery charges.

Zomato said that after receiving the show cause notice from the authorities, it had clarified on the issue along with relevant documents and judicial precedents. However, it appears to not have been appreciated by the authorities while passing the order. 

Zomato said it believes that it has a strong case on merits. However, given the amount involved and the cost of litigation, it will pay the applicable amounts to the GST authorities. 

“The company believes that it has a strong case to defend the matter before the relevant appellate authority and does not expect any financial impact on the company,” it added.

It is pertinent to note that this is the second such GST notice that Zomato has received in West Bengal. 

On August 29, it said it received a demand notice from the Assistant Commissioner of Revenue, Government of West Bengal for non-payment of GST on delivery charges along with applicable interest and penalty. It pertained to April 2019 to March 2020 period and amounted to a total of INR 3.69 Cr. However, the company said that it would be filing an appeal against that order.

Zomato has also received a number of GST demand notices in other states in recent times. For instance, it also received a GST notice of INR 3.5 Lakh in Delhi and an INR 4.59 Cr from tax authorities in Tamil Nadu in the month of August. 

Besides the aforementioned GST notices, the company also received tax demand notices from Karnataka, Haryana, and Gujarat GST authorities this year. 

The developments come at a time when Zomato is rapidly expanding its product stack. A few days ago, it announced the launch of a developer platform for its point of sale (PoS) partners to roll out new features for restaurants at scale and in significantly shorter development cycles.

Besides, the company also recently unveiled a new platform to help companies solve food expense management. Prior to that, it also launched a ticket reselling feature for customers who have bought tickets to a live event on the Zomato app. 

The launch of new features have come on the back of Zomato’s expanding top and bottom lines. Zomato’s profit grew multifold to INR 253 Cr in Q1 FY25 from INR 2 Cr in the year-ago quarter. Revenue from operations also jumped 74% to INR 4,206 Cr during the quarter under review from INR 2,416 Cr in Q1 FY24. 

As a result, the company’s shares have been touching new highs. On Thursday, the stock touched a lifetime high of INR 285.95 during intraday trading. 

Overall, Zomato has given 137% returns year to date. The stock ended today’s trading session 3.9% lower at INR 272.90 on the BSE.

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