Zomato Faces Fresh Tax Demand of Rs 23 Crore from Karnataka Authorities

Food delivery giant Zomato finds itself entangled in another tax dispute. The company recently received a demand notice of Rs 23 crore from the Karnataka commercial taxes authority for availing excess input tax credit under the Goods and Services Tax (GST) rules.

Zomato Contests the Demand

Zomato claims to have already responded to the notice, providing relevant documents and legal precedents to support their position. While the authorities haven't acknowledged these arguments, Zomato remains confident in its case and plans to appeal before the relevant appellate authority. They maintain that this new demand won't have any financial impact on the company.

Series of Tax Notices

This Rs 23 crore demand comes on the heels of a similar notice for Rs 8.6 crore issued by the Gujarat tax authorities in mid-March. These recent notices add to a string of tax disputes Zomato faces across the country.

Earlier Demands in 2023

In December 2023, Zomato received three separate demand orders from authorities in Delhi and Karnataka. These demands, totaling Rs 4.2 crore, were related to alleged short payment of GST in 2018. The company contested these claims as well, asserting they would only pay a revised interest amount of Rs 40,611 in one instance.

The Rs 402 Crore Controversy

The most significant tax dispute involves a Rs 402 crore show-cause notice issued by the GST authorities late last year. This notice pertained to unpaid GST on delivery fees collected from customers. Zomato argues that they merely act as a collection agent for their delivery partners and shouldn't be liable for these taxes.

Zomato's ongoing tax battles highlight the complexities associated with GST implementation in India. While the company remains confident in its legal standing, these disputes create uncertainty and pose potential financial risks. It remains to be seen how these cases unfold and what impact they may have on Zomato's future operations.