Foodtech giant Zomato has been issued a Goods and Service Tax (GST) demand notice of Rs 9.45 crore by the Assistant Commissioner of Commercial Taxes (Audit) in Bengaluru, Karnataka. This notice pertains to the excess availment of input tax credit, along with associated interest and penalties, as disclosed by Zomato through the National Stock Exchange.
The total amount includes Rs 5 crore in GST, Rs 3.93 crore in interest, and Rs 50.2 lakh in penalties. In response, Zomato stated, “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.”
This is the second GST-related order faced by the Gurugram-based company. In April, Zomato received a tax demand and penalty order exceeding Rs 184 crore. Additionally, in December, the GST Intelligence issued a show cause notice to Zomato, seeking Rs 401.70 crore in tax liability for the period from October 2019 to March 31, 2022. At that time, Zomato argued it was not liable to pay any tax since the delivery charge was collected on behalf of the delivery partners.
Similarly, rival food delivery service Swiggy has also faced significant tax demands, with media reports indicating a demand of Rs 350 crore.
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In January 2022, new GST rules required food delivery companies like Zomato and Swiggy to pay 5% GST on restaurant services they offer. Previously, restaurants themselves were responsible for collecting and depositing this tax. However, these changes did not address the issue of delivery charges.
In December last year, the GST department issued Rs 1.45 lakh crore in demand notices to around 1,500 businesses due to the deadline for serving notice for the 2017-2018 period. Despite this, only Rs 18,541 crore was recovered by December 30.
Avinash Dyal