Zomato faces Rs 9.45 crore GST demand from Karnataka tax authorities

Food delivery platform and quick commerce company Zomato will be filing an appeal against the order

Deepinder Goyal-led food delivery and quick commerce company, Zomato, has been hit with a Goods and Services Tax (GST) demand of over Rs 9.45 crore. The company disclosed this information to the stock exchanges, specifying that the order pertains to the financial year 2019-20 and was issued by the Assistant Commissioner of Commercial Taxes (Audit), Karnataka.

The demand comprises Rs 5,01,95,462 in GST, Rs 3,93,58,743 in interest, and a penalty of Rs 50,19,546, amounting to a total of Rs 9,45,73,751.

Zomato has stated that it intends to challenge the order. “We believe that we have a strong case on merits and the company will be filing an appeal against the order before the appropriate authority,” the company said in its filing.

The tax authorities’ demand relates to the alleged ‘excess availment of input tax credit’, along with the corresponding interest and penalties.

In response to the show cause notice, Zomato had provided clarification supported by relevant documents and judicial precedents, which the company claims were not adequately considered by the authorities.

The demand order was received on June 29. Despite this, Zomato maintains confidence in its legal position, stating that it does not anticipate any financial impact on the company.

“The Company believes that it has a strong case to defend the matter before the relevant appellate authority and does not expect any financial impact on the Company,” the filing reiterated.

As Zomato prepares to contest the demand, the market and stakeholders will closely watch the developments surrounding this significant tax dispute.

At the end of financial year 2023-24 (FY24), Zomato reported a consolidated net profit of Rs 351 crore, a significant improvement from the consolidated net loss of Rs 971 crore it had at the end of FY23.

Speaking on the results, Deepinder Goyal, founder & CEO, Zomato said, “We believe that we can continue to grow faster if we continue to innovate using our customer first principles, while creating value for all our other stakeholders – our restaurant partners, and our delivery partners.”

Shares of Zomato traded at Rs 203.60 up 1.65 per cent at 1.30 pm on Monday on the BSE.