Zomato’s GST Troubles: Foodtech Giant Receives Another Demand Notice

Already reeling under a barrage of goods and services tax (GST) notices, foodtech major Zomato has now received a tax demand and penalty order amounting to nearly INR 3.5 Lakh.

In an exchange filing on August 31 (Saturday), Zomato said that the Sales Tax Officer of Ward 300 in Delhi passed an adjudication order, raising the GST demand of INR 1.89 Lakh with interest of INR 1.59 Lakh, along with applicable penalty (not quantified).

The Deepinder Goyal-led company said that it was served with the GST notice “disputing the eligibility of the input tax credit and interest penalty thereon.” 

The GST demand notice was issued for the period April 2019 to March 2020, the filing showed. 

This is the second time this week that Zomato has been slapped with a GST tax demand and penalty order. On Thursday, it received GST notices from Tamil Nadu and West Bengal authorities for about INR 4.59 Cr.

While Zomato then said it would file an appeal against the previous tax demand orders before relevant appellate authority, it does not plan to take such action against the latest order. 

“While the company believes that it has a strong case on merits, however, given the amount involved and the cost of litigation, the company shall pay the applicable amounts to the GST authorities,” it said regarding the latest demand notice.

It is pertinent to note that Zomato is mired in 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.

The developments come at a time when shares of Zomato are on the rise on the back of its improving financial performance. Its net profit zoomed multifold to INR 253 Cr in Q1 FY25 from INR 2 Cr in the year-ago quarter.

Shares of Zomato have gained almost 102% year to date. On Friday, the stock ended 0.56% lower at INR 250.80 on the BSE.

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