Zomato receives a tax demand notice of ₹11.82 crore

Online food delivery platform Zomato is facing a tax demand and penalty order of ₹11.82 crore related to GST on export services provided to its subsidiaries outside India from July 2017 to March 2021. The order, issued by the Additional Commissioner, Central Goods and Services Tax, Gurugram, includes a GST demand of ₹5,90,94,889, along with applicable interest and penalty.

Zomato disclosed in a regulatory filing that it intends to appeal the order, stating, “We believe that we have a strong case on merits.” The company clarified that the demand order confirms the GST on export services provided to its subsidiaries, but it disagrees with the authorities’ interpretation that these services do not qualify as export of service under GST.

In response to a show cause notice, Zomato had provided explanations and supporting documents, which it believes were not fully considered by the authorities before passing the order. The company is prepared to contest the tax demand and penalty to defend its position.

This latest development highlights the ongoing challenges that Zomato and other tech companies face in navigating the complexities of tax regulations, especially concerning international transactions. The company’s decision to appeal the tax demand demonstrates its commitment to resolving the issue through the appropriate legal channels.