Zomato Faces ₹401.7 Crore GST Notice: Asserts Position on Delivery Charge Collection

Zomato has been served a Show Cause Notice (SCN) by the Directorate General of GST Intelligence, Pune Zonal Unit, demanding an alleged tax liability of ₹401.7 crore. The notice, issued on December 26, 2023, under Section 74(1) of the Central Goods and Services Tax Act, 2017, pertains to the period from October 29, 2019, to March 31, 2022.

Zomato, however, stands firm in its position, contending that it is not obligated to pay the mentioned amount. The company argues that the delivery charge, on which the tax liability is based, is collected by Zomato on behalf of its delivery partners.

According to the regulatory filing, Zomato expressed confidence in its stance, stating, "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."

The company emphasizes that, due to the contractual terms and conditions mutually agreed upon, it does not consider itself liable for any tax payments. Zomato contends that the delivery partners, in accordance with these terms, provide services directly to the customers, and the company merely facilitates the collection of delivery charges. This position is further supported by opinions from external legal and tax advisors, as outlined in the filing.

Zomato is set to respond to the SCN with an appropriate filing, as it continues to uphold its stance on the matter. The dispute revolves around the nature of the delivery charge collection and the respective responsibilities of Zomato and its delivery partners, adding another layer of complexity to the ongoing tax-related discussions in the food delivery industry.