Zomato Faces Fresh Tax Demand Notice from GST Department

Zomato, a leading Indian food delivery company, has been served a fresh tax demand notice by the Goods and Service Tax (GST) department. The Assistant Commissioner of Commercial Taxes (Audit) in Bengaluru, Karnataka, has issued an order demanding Rs 9.45 crore from the company.

Breakdown of the Demand

The demand pertains to an alleged “excess availment of input tax credit” along with associated interest and penalties. Zomato’s official filing with the National Stock Exchange reveals the breakdown of the amount: Rs 5 crore in GST, Rs 3.93 crore in interest, and Rs 50.2 lakh in penalties.

Zomato to Challenge the Order

Zomato keeps up with its place that the case needs merit and means to document an allure against the request with the proper power. This denotes the second such occurrence for the Gurugram-based organization this year. In April, Zomato confronted a comparable interest and punishment request surpassing Rs 184 crore.

History of Tax Disputes with GST

In December 2023, Zomato got a show cause notice from the GST Knowledge Directorate. The notification requested Rs 401.70 crore in charge risk for the period between October 2019 and Walk 2022. Zomato challenged this case, contending that the conveyance charge gathered by the organization follows up in the interest of conveyance accomplices and ought not be liable to burden.

Delivery Charge Taxation: A Grey Area

This issue extends beyond Zomato. Media reports indicate that Swiggy, another prominent food delivery platform, has also received a tax demand of Rs 350 crore. The current GST framework mandates a 5% levy on restaurant services provided by food delivery companies, implemented in January 2022. Previously, the responsibility for collecting and depositing this tax fell on restaurants themselves. However, the regulations remain ambiguous regarding the taxation of delivery charges.

GST Department’s Nationwide Demand Notices

In December 2023, the GST department issued demand notices amounting to Rs 1.45 lakh crore to approximately 1,500 businesses across India. This action targeted tax liabilities for the 2017-2018 period. Despite these notices, the department’s actual recovery by December 30th, 2023, only reached Rs 18,541 crore, highlighting the challenges associated with tax collection.