April 20, 2024
Zomato Receives Notice
Food delivery giant Zomato has been hit with a substantial Goods and Services Tax (GST) demand and penalty order amounting to Rs 11.8 crore. This announcement came from the company on April 19, detailing the financial period from July 2017 to March 2021.
Breakdown of the GST Order
The order includes a GST demand of Rs 5.9 crore alongside an equivalent penalty of Rs 5.9 crore. Specifically, Zomato disclosed that the Additional Commissioner of Central Goods and Services Tax in Gurugram issued the demand for GST totaling INR 5,90,94,889/- plus applicable interest (yet to be quantified), and a matching penalty of INR 5,90,94,889/-.
Nature of the Dispute
Zomato received this demand following a show cause notice concerning export services provided to its subsidiaries outside India during the mentioned period. The company has indicated that these services, which spanned from July 2017 to March 2021, are the focal point of the GST evaluation and subsequent penalty.
Next Steps for Zomato
In response, Zomato will need to address this significant financial obligation and navigate the legal and regulatory framework to resolve the demand and penalty. This situation underscores the importance of stringent compliance with tax regulations, especially in a complex and evolving field like international service provision.
This GST demand and penalty order is a notable event for Zomato, reflecting the rigorous scrutiny that major corporations face in their tax and regulatory dealings. The outcome of Zomato’s next steps will be closely watched by stakeholders and industry observers alike, as it may set precedents for similar cases in the future.
For those in the business sector, particularly in international operations, this serves as a critical reminder to ensure robust compliance mechanisms to avoid such significant fiscal repercussions.