Zomato is a leading online food delivery platform that connects customers with restaurants in various cities worldwide. Founded in 2008 in India, the company has expanded rapidly to become one of the largest food delivery platforms globally. Here latest news of Foodtech giant Zomato has been dealt another blow, receiving a GST demand and penalty order amounting to nearly INR 3.5 lakh.

Zomato Hit with Another GST Demand

Delhi, India – Foodtech giant Zomato has been dealt another blow, receiving a Goods & Service Tax demand and penalty order amounting to nearly INR 3.5 lakh. This comes just days after the company was slapped with similar notices from Tamil Nadu and West Bengal authorities.

In an exchange filing on August 31, They revealed that the Sales Tax Officer of Ward 300 in Delhi issued an adjudication order, raising a Goods & Service Tax demand of INR 1.89 lakh with interest of INR 1.59 lakh, along with applicable penalty. The notice challenges the company’s eligibility for input tax credit and interest penalty.

Multiple GST Notices in Recent Months

This is the second time this week that It has faced a GST tax demand. On Thursday, the company received GST notices from Tamil Nadu and West Bengal authorities for approximately INR 4.59 crore.

It has stated that it plans to appeal against the previous tax demand orders but will pay the applicable amounts for the latest demand notice. The company believes it has a strong case but has decided against litigation due to the cost involved.

Key GST Notices and Their Implications:

• Tamil Nadu and West Bengal: In August 2024, They received Goods & Service Tax notices from Tamil Nadu and West Bengal authorities for approximately INR 4.59 crore. These notices likely pertain to issues related to input tax credit, tax evasion, or other compliance matters.
• Karnataka: In July 2024, They were slapped with an INR 9.45 crore Goods & Service Tax notice from the Assistant Commissioner of Commercial Taxes (Audit) in Karnataka. This notice could be related to discrepancies in tax returns, underreporting of revenue, or other irregularities.
• Gurugram: In April 2024, They received a tax demand and penalty order of INR 11.8 crore from the Gurugram Goods & Service Tax authority. This notice likely highlighted issues such as incorrect tax calculations, non-compliance with Goods & Service Tax rules, or failure to file returns on time.

Tax Issues and Rising Shares

They has been grappling with multiple tax issues in recent months. In July, the company received an INR 9.45 crore Goods & Service Tax notice from the Assistant Commissioner of Commercial Taxes (Audit) in Karnataka. Prior to that, in April, the company was slapped with a tax demand and penalty order of INR 11.8 crore from Gurugram Goods & Service Tax authority.

Key Tax Issues Faced by Company:

• ITC Disputes: The company has been involved in several disputes with tax authorities regarding the eligibility of input tax credit claimed on various expenses. These disputes often arise from differing interpretations of tax laws and regulations.
• GST Liability Calculations: The company has also faced challenges in accurately calculating its Goods & Service Tax liabilities. This can be attributed to complex supply chain structures, the nature of its business operations, and the evolving Goods & Service Tax landscape.
• Tax Notices and Penalties: As a result of these disputes, The company has received multiple tax notices, including demands for payment of additional taxes, interest, and penalties.

Despite these challenges, There’s shares have been on the rise, fueled by its improving financial performance. The company’s net profit soared to INR 253 crore in Q1 FY25, a significant increase from INR 2 crore in the previous year.

As of Friday, There’s shares have gained almost 102% year to date, closing at INR 250.80 on the BSE.

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