The Goods and Service Tax (GST) Department has directed online food delivery company Zomato to pay Rs 804 crore ($94.8 million) in unpaid taxes and penalties for the period between 2019 and 2022.
Shares of Zomato, which also operates the quick commerce platform BlinkIt, declined in early trade on December 13. The share prices, however, recovered quickly and were up 18% at Rs 285.40 apiece as of 1 pm.
GST Order
“The demand order has been received in respect of non-payment of GST on delivery charges with interest and penalty thereon,” Zomato said in a filing with the exchanges.
The order comprises Rs 402 crore in unpaid taxes and an equal amount as a penalty, exceeding four times the company’s profit from the July-September quarter, the food delivery platform disclosed in an exchange filing on Thursday.
The tax dispute stems from an earlier notice in December 2022, where the tax department questioned Zomato’s liability for delivery charges. Zomato argued it is not liable for the tax since delivery charges are collected on behalf of delivery partners, who provide the service to customers.
Zomato Plans Fightback
Zomato has said that the company plans to challenge the order. The firm asserts confidence in its legal position. “We believe that we have a strong case on merits which is backed by opinions from our external legal and tax advisors,” the company said in a statement.
This development adds to Zomato’s challenges, as it is already under antitrust scrutiny alongside rival Swiggy for alleged breaches of competition laws and preferential treatment of selected restaurants on their platforms.
The company, however, has been successful in raising fresh capital in the recent past. In November, the company secured Rs 8,500 crore via a Qualified Institutional Placement (QIP), issuing 33.65 crore equity shares at Rs 252.62 each.
