Zomato, a prominent player in the foodtech industry, has received a penalty notice of INR 8.6 Cr from Gujarat’s Deputy Commissioner of State Tax for fiscal 2018-19. This penalty stems from an audit of Zomato’s GST returns and accounts, resulting in a demand of INR 4,11,68,604 for GST, along with additional interest and penalty charges totaling INR 8,57,77,696.
In response to this notice, Zomato has expressed confidence in its case, stating that it believes it has a strong argument on merit. The company intends to file an appeal against the order before the appropriate authority. The demand order was issued due to alleged excess availment of input tax credit and short payment of GST, based on audit observations and interest penalties.
Despite this setback, Zomato remains optimistic about the outcome of its appeal, anticipating no significant financial impact from the matter. This incident adds to Zomato's existing tax challenges, including a notice of INR 4.2 Cr for alleged GST short payment issued in January. Additionally, the company faces 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. Zomato has also received three orders from tax officials in Delhi and Bengaluru, citing GST underpayment along with interest and penalty under various tax acts, totaling INR 4.24 Cr.
Despite these challenges, Zomato reported its second consecutive profitable quarter, with profit after tax surging to INR 36 Cr during the September quarter of the financial year 2023-24 (FY24), marking an 18X increase from the preceding quarter.
