Zomato Faces GST Penalty Notice: What You Need to Know

Foodtech major Zomato has found itself entangled in a legal battle yet again. This time, Gujarat’s Deputy Commissioner of State Tax issued a goods and services tax (GST) penalty notice for fiscal year 2018-19 and demanded a hefty sum from the company.

The Figures Involved

According to Zomato’s filing, the company has been asked to pay INR 4,11,68,604 for GST, in addition to interest and penalty charges totaling INR 8,57,77,696. This order follows an audit of Zomato’s GST returns and accounts.

Company’s Response

In response to the notice, Zomato issued a statement stating that they firmly believe they have a strong case on merit. The filing also mentioned their intention to file an appeal against the order before the appropriate authority.

Details of the Notice

The demand order from the Deputy Commissioner of State Tax concerns excess availment of input tax credit and short payment of GST. Zomato claims to have provided clarification and relevant documents in response to the show cause notice, which they feel the authorities did not fully consider.

Financial Implications

Despite these legal challenges, Zomato remains confident in its ability to defend its position before the appellate authorities. The company anticipates no significant financial impact from this matter.

Previous Tax Issues

This recent notice adds to Zomato’s ongoing tax woes. In January, tax authorities issued a notice for alleged GST short payment amounting to INR 4.2 Cr. Additionally, the company faced a show cause notice of INR 401.7 Cr from the Directorate General of GST Intelligence, Pune Zonal Unit, related to unpaid tax on delivery charges. Further, Zomato disclosed receiving three orders from tax officials in Delhi and Bengaluru, citing GST underpayment along with interest and penalty totaling INR 4.24 Cr.

Financial Performance Amidst Challenges

Interestingly, amidst these tax-related challenges, Zomato reported its second consecutive profitable quarter. During the September quarter of the financial year 2023-24 (FY24), the company’s profit after tax surged to INR 36 Cr, marking an 18X jump from the preceding quarter.

As Zomato navigates through these legal hurdles, its financial resilience and growth trajectory remain noteworthy amidst the competitive landscape of the foodtech industry.