A demand notice for Goods and Service Tax amounting to Rs 9.45 crore has been sent to foodtech giant Zomato by the Assistant Commissioner of Commercial Taxes (Audit) in Bengaluru, Karnataka.
According to Zomato’s disclosure filed with the National Stock Exchange, the demand order was issued regarding the excessive use of the input tax credit and the interest and penalty associated with it.
According to the filings, the total amount of Rs 9.45 crore comprises Rs 5 crore in GST, Rs 3.93 crore in interest, and Rs 50.2 lakh in penalties. “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,” added Zomato.
The GST department has issued this order to the Gurugram-based business twice. The company was served with a tax demand and penalty order totaling over Rs 184 crore in April.
The GST Intelligence sent Zomato a show-cause notice in December, requesting that the foodtech company pay Rs 401.70 crore in unpaid taxes for the months of October 2019 through March 31, 2022.
Zomato stated at the time that since it collects the delivery charge on behalf of the delivery partners, it is not required to pay any taxes.
According to media reports, Swiggy, like Zomato, received a tax demand of Rs 350 crore.
Food delivery services like Zomato and Swiggy will have to pay 5% GST on the restaurant services they provide starting in January 2022. Restaurants used to collect and deposit the tax prior to this. Delivery fees were not covered by the modifications to the GST regulations, though.
In December of last year, the Goods and Service Tax department served demand notices worth Rs 1.45 lakh crore to approximately 1,500 businesses due to the fact that the notice period for the 2017–2018 period had ended. However, as of December 30 of last year, only Rs 18,541 crore had been recovered.
