Food delivery giant Zomato has received a hefty Rs 401.7-crore show cause notice on December 26, 2023, from the Directorate General of GST Intelligence (DGGI), Pune Zonal, for alleged unpaid taxes on delivery charges collected from customers, as per recent reports.
The notice, issued under Section 74(1) of the Central Goods and Services Tax Act, 2017, questions Zomato’s liability for the period from October 29, 2019, to March 31, 2022.
Zomato, however, strongly contests the claim, asserting that it is not liable for any tax on the delivery charges. The company clarifies that it collects these charges solely on behalf of its delivery partners and does not consider them as its own revenue.
“The delivery partners, not Zomato, provide the delivery services to the customers,” the company stated in an exchange filing. Zomato further backs its position with opinions from external legal and tax advisors.
Supporting Zomato’s stance, experts point out the company’s role as a platform connecting customers and independent delivery partners. Darshan Bora, a partner at Economic Laws Practice, highlights that delivery charges are the income of the delivery partners, not Zomato, and therefore the platform shouldn’t be subject to GST on those charges.
Bata India Receives Rs 60.56 Crore Sales Tax Penalty Notice
Footwear major Bata India has received a Rs 60.56 crore sales tax penalty notice from the State Tax Officer, Anna Salai Assessment Circle, Chennai, pertaining to the financial year 2018-19. The notice stems from issues identified in a final audit report dated December 25, 2023.
