Zomato receives show cause notice of Rs 402 cr over unpaid GST, says ‘not liable to pay’

Digital Desk: Zomato, a prominent  food delivery service, is  facing a financial challenge following a show cause notice from Goods and Services Tax (GST) authorities. The notice pertains to an outstanding sum of Rs 402 crore for the period spanning October 29, 2019, to March 31, 2022. The crux of the dispute lies in the government's insistence on GST for delivery charges collected by Zomato from its patrons.

The Directorate General of GST Intelligence (DGGI) issued pre-demand notices in November, targeting leading food delivery platforms, including Zomato and Swiggy, with a combined GST payment demand of Rs 750 crore.

Zomato vehemently contests its tax liability, asserting its role as a mere fee collector for delivery partners. According to the company's official response to the Bombay Stock Exchange (BSE), Zomato plans to furnish a comprehensive reply to the notice. Their argument hinges on mutually agreed contractual terms, emphasizing that delivery partners directly serve customers, thereby absolving Zomato of direct tax responsibility.

As the dispute unfolds, it underscores the evolving challenges faced by digital platforms in navigating tax regulations, with potential ramifications for the broader gig economy.