New delhi: In a significant development, the popular online food delivery platform Zomato has been hit with a substantial Goods and Services Tax (GST) demand notice. The notice, issued by the Additional Commissioner of Central GST in Gurugram, orders Zomato to pay a tax and penalty totaling ₹11.82 crore for services exported to its foreign subsidiaries.
Detailed Breakdown of the GST Demand:
The tax demand covers the period from July 2017 to March 2021, with the GST component amounting to ₹5.9 crore and an equivalent penalty summing up to the same amount. This demand arises from the services Zomato provided to its subsidiaries located outside India, which the tax authorities contend do not qualify as ‘export of services’ under the current GST framework.
Zomato’s Response and Legal Stance:
Zomato has expressed its intention to challenge the order, stating that it has a strong case based on merits. The company plans to file an appeal against the notice, arguing that the tax authorities have overlooked supporting documents and legal precedents that Zomato believes substantiate its position.
Previous Notices and Company’s Stock Market Reaction:
This is not the first instance of Zomato facing tax-related challenges. Earlier in the month, the company received notices from tax authorities in Delhi and Karnataka regarding an alleged shortfall in GST payments amounting to ₹4.2 crore in 2018. Despite the recent tax demand, Zomato’s shares closed 1.78% higher at ₹188.50 on the National Stock Exchange (NSE) as of April 19.
Zomato’s Ongoing Business Ventures:
Amidst these tax-related developments, Zomato continues to innovate in its service offerings. The CEO, Deepinder Goyal, recently announced the launch of a ‘large order fleet’ comprising electric vehicles, designed to efficiently handle substantial orders for gatherings and events, thereby enhancing customer experience.
As Zomato navigates through this tax demand challenge, the outcome of its appeal and the subsequent impact on its business operations remain closely watched by investors and industry observers alike.
