Shares of food delivery platform Zomato fell 5% to Rs 120.7 in Thursday’s trade on BSE after the firm received a Rs 402-crore show-cause notice from the goods and services tax (GST) authorities over unpaid dues.
The online food delivery firm informed stock exchanges that it has received a show cause notice under Section 74(1) of the Central Goods and Services Tax Act, 2017 from the Directorate General of GST Intelligence, Pune Zonal unit.
The show cause notice, Zomato said, requires the company to show cause as to why an alleged tax liability of Rs 401.70 crore along with interest and penalty for the period from October 29, 2019 to March 31, 2022 should not be demanded from the company.
“The amount alleged in the SCN is based on the amounts collected by the company as delivery charges from the customers on behalf of the delivery partners during the referred period. The company strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners,” Zomato said in a BSE filing.
Zomato said the delivery partners have provided the delivery services to the customers and not the company, as per the contractual terms and conditions mutually agreed upon. This, Zomato said, is also supported by opinions from its external legal and tax advisors.
Zomato said it would be filing an appropriate response to the show cause notice.
“Please note that a disclosure is required to be made only of orders with penalties passed by authorities or pending litigation/dispute that has a material adverse impact on the company. At this stage, no order of any kind has been passed and as mentioned above, the company believes that it has a strong case on merit. Hence, this disclosure is being made voluntarily and as a matter of abundant caution given the large alleged tax demand in question,” Zomato said.
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