Zomato’s GST Troubles: Foodtech Major Gets Fresh INR 18 Cr GST Demand, Penalty Order

The tax woes of foodtech major Zomato continue to worsen as West Bengal GST authorities have slapped the company with a fresh goods and services tax (GST) demand and penalty order of over INR 17.70 Cr.

In an exchange filing on September 18 (Wednesday), Zomato said that the Assistant Commissioner of Revenue, Government of West Bengal, passed an adjudication order raising GST demand of INR 11.12 Cr, along with an interest of INR 5.46 Cr and a penalty of INR 1.11 Cr.

The Deepinder Goyal-led company said that it was served with the GST notice for “non-payment of GST on delivery charges and interest, penalty thereon”.

The GST notice was issued for the period April 2021 to March 2022, the filing showed.

“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. This is also supported by opinions from our external legal and tax advisors,” Zomato said.

This is the third instance when Zomato has received a GST notice from West Bengal authorities. On September 13, Zomato said it received a tax demand and penalty order of INR 9.85 Cr from the Assistant Commissioner of Revenue, Government of West Bengal.

While the food delivery and quick commerce giant initially said it would pay the relevant dues to settle the case with West Bengal authorities, it later said it would contest the decision.

Zomato is facing crackdown by GST authorities in several states. Last month, Tamil Nadu and West Bengal authorities levied a GST fine of INR 4.59 Cr on Zomato. 

In July, the foodtech major received a GST notice of INR 9.45 Cr 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 a penalty order of INR 11.8 Cr from Gurugram GST authorities.

Despite the mounting GST troubles, shares of Zomato have skyrocketed 121% year to date on the back of the foodtech giant’s improving profitability and launch of several lucrative features, such as group ordering, ticket rescheduling, among others.

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.