In a regulatory filing on 28 December, 2023, prominent online food delivery platform Zomatohas stated that it has received a show cause notice (SCN) from the Goods and Services Tax (GST) office.
The notice pertains to an alleged tax liability of Rs 401.7 crore, accompanied by interest and penalties, related to the collection of delivery fees from customers. The specified period for this claim spans from 29 October 2019, to 31 March 2022.
Zomato clarified the development in an official statement: “Please note that Zomato (‘the Company’) has received a show cause notice (‘SCN’) on 26 December 2023 under Section 74(1) of the Central Goods and Services Tax Act, 2017 from the Directorate General of GST Intelligence, Pune Zonal Unit. The SCN requires the Company to show cause as to why an alleged tax liability of INR 401,70,14,706/- (INR Four Hundred and One Crore, Seventy lakhs, Fourteen Thousand Seven Hundred and Six Only) along with interest and penalty for the period from 29 October 2019 to 31 March 2022 should not be demanded from the Company.”
Zomato’s stocks exhibited resilience despite this development, closing in the green on 27 December. On the BSE, the stocks saw an increase of 1.64 percent, reaching Rs 127.05. Simultaneously, on the NSE, the stocks closed with a gain of 1.48 percent at R 126.85.
“The amount alleged in the SCN is based on the amounts collected by the Company as delivery charges from the customers on behalf of the delivery partners during the referred period,” clarified Zomato in its response to the SCN.
This tax notice adds a layer of complexity to Zomato’s financial landscape and regulatory compliance. The company is expected to respond to the show cause notice and address the concerns raised by the GST office regarding the alleged tax liability.
The development will be closely monitored by investors and industry observers, given Zomato’s position as a major player in the online food delivery sector in India.
