Zomato, one of India’s leading food delivery platforms, has been hit with a significant tax demand by the GST department. The demand amounts to Rs 803.4 crore, which includes interest and penalties. This notice, issued by the Joint Commissioner of CGST and Central Excise in Thane, Maharashtra, covers the period from October 29, 2019, to March 31, 2022.
Details of the Tax Demand
The GST authorities claim that Zomato failed to pay taxes on delivery charges, leading to this massive demand. According to the regulatory filing by Zomato, the total demand includes Rs 401.7 crore in GST, with an equivalent amount levied as penalties.
In response, Zomato stated, “We believe that we have a strong case on merits, which is supported by advice from our external legal and tax experts.” The company has confirmed its intention to challenge the order by filing an appeal with the appropriate authority.
Previous GST Notices Faced by Zomato
This is not the first time Zomato has faced tax-related issues. Over the past year, the company has received multiple GST notices from various state authorities.
In August 2024, Zomato received GST tax demand notices amounting to Rs 4.59 crore from Tamil Nadu and West Bengal. These demands included interest and penalties.
- Tamil Nadu Demand: The Assistant Commissioner of GST and Central Excise issued a notice demanding Rs 81.16 lakh in GST, along with a penalty of Rs 8.21 lakh. The interest amount for this notice is yet to be calculated.
- West Bengal Demand: A much larger demand of Rs 1.92 crore was issued by the Assistant Commissioner of Revenue. This included Rs 1.58 crore in interest and a penalty of Rs 19.24 lakh.
Zomato has announced plans to challenge these notices in the respective appellate forums.
Karnataka Tax Notice in July 2024
In July 2024, Zomato received another GST demand from the Assistant Commissioner of Commercial Taxes (Audit) in Bengaluru, Karnataka. This notice involved a total of Rs 9.45 crore, including interest and penalties.
The demand was related to the excess availment of input tax credit for the financial year 2019-20. It included:
- Rs 5.01 crore in GST
- Rs 3.93 crore in interest
- Rs 50.19 lakh in penalties
April and December Notices
Earlier in April 2024, Zomato was issued a tax demand and penalty order totaling over Rs 184 crore. This was followed by another notice in December 2023, when the GST Intelligence sought Rs 401.7 crore from the company for tax liabilities between October 2019 and March 2022.
Zomato had responded to these notices by asserting that it was not liable to pay the amounts. The company argued that the delivery charges in question were collected on behalf of its delivery partners and, therefore, should not be subject to GST.
Zomato’s Response and Next Steps
Despite the repeated tax notices, Zomato remains confident in its legal position. The company has consistently stated that it has strong grounds to contest these demands. Supported by legal and tax advisors, Zomato plans to appeal each of these orders through the appropriate legal channels.
The ongoing tax disputes highlight the regulatory challenges faced by food delivery platforms like Zomato. The issue of whether delivery charges are subject to GST has become a contentious topic, with significant financial implications for the industry.
As Zomato continues to address these challenges, the outcome of these appeals could set a precedent for how similar cases are handled in the future.
The Rs 803.4 crore GST demand is the latest in a series of tax-related issues faced by Zomato. While the company plans to contest the notice, the situation underscores the need for greater clarity in tax regulations for the food delivery sector. As the legal process unfolds, Zomato’s response will be closely watched by stakeholders across the industry.
