Zomato, a prominent food delivery service, disclosed receiving a show cause notice of Rs 401.7 crore from the Directorate General of GST Intelligence (DGGI) due to unpaid taxes on delivery charges amassed from customers. The company clarified that it shouldn’t be held liable for penalties between October 29, 2019, and March 31, 2022, as the funds gathered were “on behalf of the delivery partners during the referred period.” According to their regulatory filing, Zomato asserted, “Given the contractual terms…the delivery partners have provided the delivery services to the customers and not the company.”
Asserting its stance, Zomato announced intentions to submit a fitting response to the notice, emphasizing, “At this stage, no order of any kind has been passed, and the company believes that it has a strong case on merit.” This notice followed reports of the DGGI sending GST notices worth Rs 750 crore to both Zomato and Swiggy, seeking Rs 400 crore from the former and Rs 350 crore from the latter.
Since January 2022, food delivery platforms like Swiggy and Zomato have been accountable for GST payments to the Centre for restaurant services offered through their apps. However, clarity regarding the taxation of delivery charges remains elusive.
Financially, Zomato showcased its second consecutive quarter of consolidated profits, totaling Rs 36 crore in Q2FY24, a significant leap from Rs 2 crore recorded in the previous quarter. Conversely, during the same period last year, the company reported a loss of Rs 251 crore.
Revenue from operations soared by 71% year-on-year to Rs 2,848 crore in Q2, climbing from Rs 1,661 crore a year ago and Rs 2,416 crore in the previous quarter. However, total expenses for the Gurugram-based firm surged to Rs 3,039 crore in the quarter ended September, marking an increase from Rs 2,612 crore in the preceding quarter and Rs 2,092 crore a year ago.
