Zomato issues 57 page GST evasion order demanding ₹803 crore – CNBC TV18
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CNBC-TV18 has accessed the 57-page demand notice, where the authorities have claimed that a non-payment of over ₹400 crore along with a penalty of over ₹400 crore and interest needs to be paid by Zomato to the tax authorities.
Tax department says that Zomato failed to include delivery charges in the GST returns filed by the company even as the company says that it is contesting the claims.
CNBC-TV18 has reviewed the 57 page order by the Central GST authorities in Thane, Maharashtra which were issued to Zomato on 28 November 2024.
THE DETAILS:
According to the orders, Central GST, Thane in Maharashtra has alleged Zomato of non-payment of GST by not including delivery charges in GST returns “between 29 Oct 2019 to 31 March 2022.”
The Non-Payment of GST computed by the tax authorities is worth ₹401.70 crore and a penalty of an equal amount too has been levied on this non-payment, making the total dues to tax authorities at ₹
803.40 crore plus interest.
The alleged claims by the GST authorities are that Zomato charged delivery charges or fees from its customers and thus is liable to pay 18% GST.
Post detailed assessment of the matter, CGST Thane issued orders raising ₹803 crore plus interest from Zomato.
It says that “Zomato used to charge certain amount of delivery charges/fees for home or door-to-door delivery collected from customers/users and paid GST at 18% on it up to 28 Oct 2019.”
However, from 29 Oct 2019 with no significant changes in on-field operations/mechanisms in food delivery service and procedures of charging and collecting delivery fees from its customers, “they abruptly stopped payment of GST on Delivery fees” collected by them, the order claims.
Post 28th Oct 2019, Zomato changed contracts with delivery partners or riders and discontinued payment of GST on delivery fees claiming Zomato as only Technology platform provider and presented to GST authorities that delivery partners as independent service providers responsible for services and tax liabilities, the order said.
However, based on scrutiny of documents by GST authorities in the orders said that “it appeared that Zomato have unilaterally revised agreements” with delivery partners only to discontinue from their obligation of delivery to make these delivery partners responsible but it was Zomato only which was actual provider of home delivery service of food service and thus is liable to pay GST at 18% on delivery fees collected, the order added.
Now to be seen is whether Zomato clears these payments to tax authorities or it challenges these orders in courts as the company in a statement issued to the stock exchanges on 12th December said that “we believe that we have a strong case on merits which is backed by opinions from our external legal and tax advisors. The company will be filing an appeal before the appropriate authority.”
(Edited by : Poonam Behura)
