Zomato Faces Another GST Demand ; Penalty and Interest Exceed INR 800 Cr

Foodtech giant Zomato has received a new GST demand notice amounting to INR 401.7 Cr, along with applicable interest and an equal penalty, taking the total demand to INR 803.4 Cr (excluding interest).

The notice, issued by the Joint Commissioner of CGST & Central Excise, Thane Commissionerate, pertains to non-payment of GST on delivery charges.

Zomato announced it plans to appeal the notice, asserting a strong case backed by legal and tax expert opinions. This demand exceeds Zomato's FY24 net profit of INR 351 Cr and comes after the company reported a net profit of INR 176 Cr for the September quarter of the ongoing fiscal year.

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This is not the first GST-related issue for Zomato. Earlier this year, the company faced similar demands from authorities in Karnataka, Haryana, Gujarat, and West Bengal, including a September penalty order of over INR 17.7 Cr from West Bengal GST authorities. Despite these notices, Zomato maintains its stance and continues to appeal.

Rival Swiggy has also faced comparable GST challenges, with liabilities amounting to INR 326.7 Cr, as per its updated draft red herring prospectus.

The latest GST notice comes shortly after Zomato raised INR 8,500 Cr (~$1 Bn) through its first qualified institutional placement (QIP) in late November. Shares of Zomato fell 2.36%, closing at INR 284.90 on December 12.

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