Zomato receives Rs 9.5 Cr demand notice from GST

Foodtech major Zomato has received a Goods and Service Tax demand notice of Rs 9.45 crore from the Assistant Commissioner of Commercial Taxes (Audit), Bengaluru, Karnataka.

The demand order has been issued in respect of excess availment of input tax credit and interest, penalty thereon, Zomato’s disclosure filed through the National Stock Exchange shows.

The total amount of Rs 9.45 crore includes Rs 5 crore in GST, along with Rs 3.93 crore in interest and Rs 50.2 lakh in penalties, according to the filings. "We believe that we have a strong case on merits and the Company will be filing an appeal against the order before the appropriate authority,” added Zomato.

This is the second such order from the GST department to the Gurugram-based company. In April, the firm received a tax demand and penalty order of more than Rs 184 crore.

In December, Zomato received a show cause notice from the GST Intelligence which was seeking Rs 401.70 crore from the foodtech company in tax liability for the period between October 2019 and March 31, 2022.  At that time, Zomato said that it is not liable to pay any tax since the delivery charge is collected by the company (Zomato) on behalf of the delivery partners.

Like Zomato, Swiggy also received a tax demand of Rs 350 crore as per media reports.

In January 2022, food delivery companies such as Zomato and Swiggy were mandated to pay 5% GST on restaurant services they offer. Before this, restaurants used to collect and deposit the tax. However, the changes in the GST rules did not address delivery charges.

The Good and Service Tax department issued Rs 1.45 lakh crore of demand notices to around 1,500 businesses in December last year because of the deadline for serving notice for the 2017-2018 period. However, the recovery was only Rs 18,541 crore till December 30 last year.