On Wednesday the Directorate General of GST Intelligence served a show cause notice to Zomato, the leading food delivery service. The notice alleges a non-payment of Central Goods and Services Tax (GST) on delivery charges collected in the past by the company. In the notice, Zomato is alleged with a tax liability of nearly Rs 402 crores, including interest and penalties, between October 29, 2019, and March 31, 2022.
The Allegation and Zomato’s Response
The notice demands an explanation from the Gurugram-based company for not remitting GST on delivery charges paid by customers. However, in a swift response, Zomato maintained that they are “not liable to pay any tax” on these charges. The company asserts that the app collects these amounts on behalf of its delivery partners and does not constitute direct revenue for Zomato. This stance is supported by advice from the company’s external legal and tax advisors, and Zomato plans to file a comprehensive response to the notice.
Context of the Tax Demand
This development follows months after a similar notice was issued to Zomato’s rival, Swiggy, demanding payment of GST on delivery charges worth hundreds of crores.