Zomato receives Rs 402 cr GST show cause notice, says ‘not liable to pay’

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Food delivery major Zomato has received a Rs 401.7 crore show cause notice from the Directorate General of GST Intelligence (DGGI) over unpaid taxes on delivery charges collected from customers, the company said in a regulatory filing late Wednesday.

The company claimed that it is not liable to pay the penalty for the period from October 29, 2019, to March 31, 2022, as the amount collected from customers is “on behalf of the delivery partners during the referred period”.

Given the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company, the filing read.

Zomato said it would be filing an appropriate response to the notice. “At this stage, no order of any kind has been passed and as mentioned above, the company believes that it has a strong case on merit,” it said.

Last month, the DGGI had reportedly sent GST notices worth Rs 750 crore to Zomato and Swiggy, seeking Rs 400 crore from the former and Rs 350 crore from the latter.

Since January 2022, food delivery platforms such as Swiggy and Zomato have been liable to pay GST to the Centre for restaurant services facilitated through their apps. However, there has been no clarity on delivery charges.

Zomato reported its second consecutive quarter of consolidated profits at Rs 36 crore in the second Q2FY24), up from Rs 2 crore a quarter ago. The company reported a loss of Rs 251 crore during the corresponding period last year.

Zomato’s revenue from operations rose 71 per cent year-on-year (YoY) to Rs 2,848 crore in Q2, up from Rs 1,661 a year ago. It had reported a revenue of Rs 2,416 in the previous quarter. Total expenses for the Gurugram-based food delivery firm increased to Rs 3,039 crore in the quarter ended September, up from Rs 2,612 a quarter ago and Rs 2,092 a year ago.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, M.com) having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, M.com) having 15 years of experience. Educator and Digital Creator

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