Zomato Slapped with INR 23 Cr Tax Notice by Karnataka Authority

Zomato, a major player in the food technology industry, disclosed in a regulatory filing that it has been slapped with a goods and services tax (GST) notice amounting to INR 23.26 crore for the financial year 2018-19 by tax authorities in Karnataka.

According to the notice, the company is required to settle a GST payment of INR 11.27 crore, along with additional charges for interest and penalties, resulting in the total amount of INR 23.26 crore.

Related: Zomato Price Target Raised by ICICI Securities on Robust Revenue CAGR

In its statement, Zomato stated, “We want to inform our stakeholders, in compliance with Regulation 30 of the Listing Regulations, that our company has been issued an order for the fiscal year 2018-19 following an audit of GST returns and accounts conducted by the Assistant Commissioner of Commercial Taxes (Audit), Karnataka. This order demands a GST payment of INR 11,27,23,564, along with applicable interest and penalty charges totaling to INR 23,26,64,271.”

The company under Deepinder Goyal’s leadership mentioned that it got an order from the authorities on March 30 regarding excessive use of input tax credit and the accompanying interest and penalties. Zomato stated that even though they replied to the show cause notice with explanations backed by relevant documents and legal examples, the authorities didn’t take all of this into account when issuing the order.

So, Zomato is gearing up to contest the ruling with the proper authorities. “We firmly believe in our ability to present a robust defense before the appellate authority,” the company stated, reassuringly adding, “We don’t anticipate any financial strain as a result of this matter.”

This development arrives amidst Zomato’s ongoing tax challenges. Just last month, the foodtech giant found itself facing a GST penalty notice from Gujarat’s Deputy Commissioner of State Tax, pertaining to the fiscal year 2018-19. The authorities demanded a payment of INR 4,11,68,604 for GST, alongside additional charges for interest and penalties, summing up to INR 8,57,77,696.

In December, Zomato got a notice from the Directorate General of GST Intelligence, Pune Zonal Unit, asking about unpaid taxes totaling INR 401.7 Cr. This was related to delivery charges from customers between October 29, 2019, and March 31, 2022.

At that time, Zomato defended itself, stating firmly that it didn’t believe it owed any taxes. They argued that the delivery charges collected were meant for the delivery partners, not for the company itself.

Zomato has announced its second consecutive profitable quarter, with a profit after tax of INR 36 Cr during the September quarter of the financial year 2023-24 (FY24). This marked an 18X increase from the PAT of INR 2 Cr in the previous quarter.

On Monday, April 1st, Zomato shares opened at INR 182.35.

Zomato, a major player in the food technology industry, faced a GST notice of INR 23.26 crore for the fiscal year 2018-19 in Karnataka, leading to ongoing tax challenges. Nonetheless, under Deepinder Goyal’s leadership, the company expressed confidence in contesting the ruling, reassuring stakeholders of no anticipated financial strain. Notably, despite these challenges, Zomato announced its second consecutive profitable quarter, with a profit after tax of INR 36 crore during the September quarter of the financial year 2023-24. On April 1st, Zomato shares opened at INR 182.35, reflecting its performance amidst the tax-related issues and recent financial successes.