GST Department’s Tax Demand
Zomato, the popular food delivery platform, has been issued a tax demand of Rs 803.4 crore by the GST department in Thane. The demand pertains to the non-payment of GST on delivery charges collected by Zomato from October 29, 2019, to March 31, 2022. The demand includes Rs 401.7 crore as outstanding taxes and an equal amount as a penalty, significantly more than Zomato’s profit for the July-September 2024 quarter.
Zomato’s Response and Appeal Plans
Zomato plans to challenge the tax demand. According to the company’s regulatory filing, Zomato believes it has a strong case supported by opinions from its external legal and tax advisors. The company intends to file an appeal with the appropriate authority against the order, stating that it does not believe it is liable to pay the tax as the delivery charges are collected on behalf of the delivery partners, not directly by Zomato.
Background and Legal Dispute
This issue was first raised by the GST department in December 2023, when Zomato was questioned about why it should not be required to pay the tax and penalty. Zomato argued that the delivery services were provided by its delivery partners, not the company itself, and thus it should not be responsible for the GST on the delivery charges. This tax demand adds to the ongoing challenges for Zomato, which, alongside competitor Swiggy, is facing scrutiny over alleged violations of competition laws and concerns about preferential treatment for certain restaurants on its platform.
