A substantial tax demand has arrived at Zomato’s doorstep, marking a recent development in the food delivery giant’s story. This demand, which comes to an astounding ₹11.81 crore, includes a penalty order and a GST demand from Zomato, for July 2017 through March 2021.
GST Troubles On The Menu For Zomato
The details of this order, which were made public via a regulatory filing on April 19, break down as follows: a GST demand of ₹5.9 crore along with an equivalent penalty amount. As per the Business Standard reports, the Central Goods and Services Tax Additional Commissioner in Gurugram issued the directive. It zeroes in on the export services rendered by Zomato to its foreign subsidiaries throughout the aforementioned timeframe.
Zomato goes into detail about the legal aspects of the order in its filing. Referencing both Section 20 of the Integrated Goods and Services Tax Act, 2017 and Section 74(1) of the Central Goods and Services Tax Act, 2017, the business exposes the intricacies involved in the request. Zomato made a lot of effort to refute the claims with a plethora of evidence and legal citations, but the authorities remained steadfast in their decision to issue the order. Zomato is not going to back down and has declared that it will file an appeal with the relevant appellate body against the ruling.
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Export Practices Under Spotlight
Zomato has experienced financial instability before, as evidenced by its previous tax saga. According to Business Standard, just last month, the company found itself embroiled in another GST debacle stemming from the fiscal year 2018-19. An order, stemming from an audit of GST returns and accounts by the Deputy Commissioner of State Tax, Gujarat, demanded a hefty GST payment of ₹4,11,68,604. The total amount increased to an astounding ₹8,57,77,696 when extra interest and penalty charges were taken into account.
Zomato’s stock, amidst these turbulent financial waters, has certainly managed to weather the storm. As per the Business Standard reports, it is evidenced by the closure of its shares at ₹189.20, marking a commendable uptick of 2.19%. However, the business is navigating rough regulatory waters and struggling to pay large tax bills that could derail its progress towards profitability.
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