GST department asks Zomato to pay Rs 800 crore in taxes, fines

New Delhi, Dec 12, 2024

Zomato faces a substantial ₹803.4 crore GST demand from Thane authorities for unpaid taxes on delivery charges between October 2019 and March 2022. The demand includes a penalty equal to the tax amount. Zomato maintains it's not liable, arguing delivery partners, not the company, provide the service, and plans to appeal the decision.

Food delivery platform Zomato announced on Thursday that it has received a tax demand of Rs 803.4 crore, including interest and penalty, from the GST department in Thane.

The demand is related to non-payment of GST on delivery charges during the period from October 29, 2019, to March 31, 2022, according to a regulatory filing by the company.

The order requires Zomato to pay Rs 401.7 crore in outstanding taxes and an equal amount as a penalty. The total demand is more than four times Zomato's profit for the July-September 2024 quarter.

Zomato said that it plans to appeal the decision. "We believe that we have a strong case on merits, which is backed by opinions from our external legal and tax advisors. The company will be filing an appeal against the order before the appropriate authority," the filing read.

The GST department had raised the issue in December 2023, asking Zomato why it should not be required to pay the tax and penalty. At the time, Zomato argued that it was "not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners" and that "delivery partners have provided the delivery services to the customers and not the company."

This tax demand adds to challenges for Zomato, which, along with competitor Swiggy, is under scrutiny for allegedly violating competition laws and favoring certain restaurants on its platform.

[The Times of India]