Food delivery app Zomato gets Rs 402 cr show cause notice over unpaid GST

In the regulatory filing, the company said, “The show cause notice requires the company to show cause as to why an alleged tax liability of Rs 401,70,14,706 along with interest and penalty for the period from October 29, 2019, to March 31, 2022, should not be demanded from the company. The amount alleged in the SCN is based on the amounts collected by the company as delivery charges from the customers on behalf of the delivery partners during the referred period.”

Zomato, however, said that it was not liable to pay any tax on delivery charges as it was collected on behalf of the delivery partners.

“Further, in view of the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company,” it said, adding that Zomato will file an “appropriate response” to the show cause notice.

From January 1, 2022, food delivery platforms have been mandated to collect and deposit GST on behalf of restaurants for the orders placed. However, no clarity has been given on the delivery fees. Typically, gig workers operate as delivery workers for food delivery platforms and are paid on the basis of the number of orders delivered.

“At this stage, no order of any kind has been passed and as mentioned above, the company believes that it has a strong case on merit,” Zomato said on Wednesday.

On Thursday, as of 9:30 am, Zomato’s shares were down over 2 per cent and were trading at Rs 124.40 apiece on BSE. 

First Published: Dec 28 2023 | 9:36 AM IST