‘Not liable to pay any tax’: Zomato responds to Rs 402 crore tax liability notice

Zomato said that it is not liable to pay any tax since the delivery charge collected by the company is on behalf of the delivery partners. The Deepinder Goyal-led company informed the stock exchanges that it received a notice from the Directorate General of GST Intelligence asking why an alleged tax liability of Rs 401.70 crore, along with interest and penalty from October 29, 2019 to March 31, 2022, should not be demanded from the company. 

The food aggregator said that the tax liability is based on the amount collected by Zomato as delivery charges from customers on behalf of the delivery partners. 

“The company strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners. Further, in view of the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company. This is also supported by opinions from our external legal and tax advisors,” stated Zomato.

The food delivery and cataloging platform said that it ill file an appropriate response to the SCN.

Zomato, in its statement, added that it has a strong case on merit and has made the disclosure voluntarily and as a “matter of abundant caution given the large alleged tax demand in question”.

It added that a disclosure is required to be made only of orders with penalties passed by the authorities or pending litigation/dispute that has any material impact on the company. “At this stage, no order of any kind has been passed,” it highlighted.

Meanwhile, shares of Zomato have rallied 110 per cent in 2023 so far.

Also read: Zomato shares in focus as firm gets Rs 402 crore tax notice