Zomato Faces Rs 11.81 Crore GST Demand and Penalty Over Export Services

Food delivery giant Zomato announced on April 19 that it has been served with a Goods and Services Tax (GST) demand and penalty order amounting to Rs 11.81 crore, covering the period from July 2017 to March 2021. The company made this announcement through a regulatory filing after market hours on Friday.

The demand order includes a GST demand of Rs 5.9 crore along with an equivalent penalty of Rs 5.9 crore. Zomato disclosed that the order was issued by the Additional Commissioner of Central Goods and Services Tax, Gurugram, based on export services provided by the company to its subsidiaries outside India during the specified period.

In response to the show cause notice related to this matter, Zomato stated that it had provided detailed clarifications supported by relevant documents and legal precedents. However, the company expressed disappointment that these submissions were apparently not considered by the authorities when passing the order.

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Zomato’s regulatory filing did not quantify the interest amount applicable on the GST demand. The company is expected to navigate this issue through legal channels and continue engaging with tax authorities to address the demand and penalty.

This development underscores the complexities faced by businesses in navigating tax regulations, particularly concerning cross-border transactions and export services. Zomato’s response signals its commitment to addressing the issue transparently and in accordance with applicable legal frameworks.

The impact of this GST demand and penalty order on Zomato’s financials and operations remains to be seen as the company evaluates its options for recourse and resolution.