Zomato Faces INR 23 Crore GST Notice from Karnataka Authority

• ByStartupStory     |    April 1, 2024

In a recent development, leading foodtech platform Zomato has encountered a significant tax hurdle, with Karnataka tax authorities issuing a Goods and Services Tax (GST) notice amounting to INR 23.26 crore for the financial year 2018-19. The regulatory filing from the company revealed that the notice comprises a GST payment demand of INR 11.27 crore, coupled with additional interest and penalty charges.

According to Zomato, the notice, received on March 30, 2024, is linked to alleged overutilization of input tax credit and associated interest and penalties. Despite the company’s efforts to address the concerns raised in the show cause notice with clarifications supported by relevant documents and legal precedents, the authorities proceeded with the issuance of the order without fully considering the information provided.

Zomato, led by Deepinder Goyal, intends to contest the order before the appropriate authorities, expressing confidence in its ability to defend the matter. The company emphasizes that it does not anticipate any adverse financial implications from the situation.

This development comes amidst Zomato’s ongoing tax challenges, with a recent penalty notice from Gujarat’s Deputy Commissioner of State Tax for fiscal 2018-19 and a prior show cause notice from the Directorate General of GST Intelligence, Pune Zonal Unit, over unpaid tax related to delivery charges collected from customers.

Zomato’s financial performance has showcased resilience despite these challenges, with the company reporting its second consecutive profitable quarter. During the September quarter of the financial year 2023-24, Zomato witnessed a substantial surge in profit after tax, reaching INR 36 crore, marking an 18X increase from the preceding quarter.

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