Zomato Receives GST Demand Notice for INR 803 Crores!

• Breaking news: Zomato slapped with a massive Rs 803.4 crore GST notice on December 12, 2024!
• The demand includes a massive bill, including penalties and interest, for unpaid GST on delivery charges from 2019 to 2022!

Tax Notice Received

Zomato received a GST notice on December 12, 2024, from the Joint Commissioner of CGST & Central Excise, Thane, Maharashtra.

The notice includes a GST demand of Rs 401.7 crore with an additional penalty of Rs 401.7 crore.

The notice demands Rs 803.4 crore for non-payment of GST on delivery charges from October 29, 2019, to March 31, 2022, including interest and penalties

The Directorate General of GST Intelligence had argued that delivery charges fall under the services category and should be subject to 18% GST.

Zomato’s Response….

Zomato stated that it believes it has a strong case, supported by opinions from external legal and tax advisors. The company plans to appeal the order before the appropriate authority.

All the GST Disputes so far

GST Demand from Thane, Maharashtra (December 2024)

• Amount: Rs 803 crore (including interest and penalty).
• Reason: Non-payment of GST on delivery charges for the period October 29, 2019 – March 31, 2022.
• Zomato’s Response: The company believes it has a strong case and plans to appeal the decision.
• Zomato stated in its regulatory filing – “The company strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners. Further, in view of the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company.”

GST Demand from West Bengal (September 2024)

• Amount: Rs 17.7 crore (GST demand of Rs 11.12 crore, interest of Rs 5.46 crore, and penalty of Rs 1.11 crore).
• Earlier in the same month, the company had also been issued a GST notice for ₹9.85 crore by the same authority.
• Reason: Non-payment of GST on delivery charges for the period April 2021 – March 2022.
• Zomato’s Response: Zomato intends to contest the order, which is backed by external legal and tax opinions.
• In a regulatory filing, the company stated, “We believe we have a strong case and will be challenging this demand before the appropriate authority. In response to the show-cause notice, we provided clarifications supported by relevant documents and judicial precedents, which appear to have been overlooked by the authorities while issuing the order.”

GST Notice from Karnataka (April 2024)

• Tax notice of Rs 23.26 crore from Karnataka tax authorities for FY2018-19. The notice includes a GST demand of Rs 11.27 crore, with additional charges for interest and penalty.
• Reason: Overutilisation of input tax credit along with applicable interest and penalty.
• Zomato’s Response: The company stated it is confident in its stance and plans to appeal the order.

GST Demand from Gujarat (March 2024)

• ₹8.6 crore GST penalty notice from Gujarat’s Deputy Commissioner of State Tax.
• The notice pertains to FY2018-19 and was issued following an audit of GST returns and accounts.
• Zomato stated that the demand order pertains to the excess availment of input tax credit and the short payment of GST.

GST Fine in Tamil Nadu (August 2023)

• Amount: Rs 4.59 crore GST fine for non-payment of GST on delivery charges.
• Zomato’s Response: Zomato disputed the fine and is engaging in legal proceedings.

GST Demand from Gurugram (April 2023)

• In April 2024, Zomato received a GST notice in Gurugram pertaining to export services provided to its subsidiaries outside India during the period from July 2017 to March 2021.
• Amount: Rs 11.8 crore GST demand and penalty.
  Zomato’s Response: Zomato is contesting the order with legal support.

Zomato has been facing repeated GST issues in various states, particularly over the payment of GST on delivery charges.

Despite these challenges, the company maintains its strong defence and continues to appeal or contest these claims.