Food delivery service Zomato said on Wednesday that it received a show cause notice by the Directorate General of GST Intelligence for non payment of Central Goods and Services Tax (GST) on delivery charges in the past.
The show cause notice issued to Zomato asked the Gurugram-based company to respond to why they haven't paid an alleged tax liability of nearly ₹402 crore, along with the interest and penalty.
The notice has demanded Zomato to show cause for not paying GST of ₹402 crore, collected allegedly on the delivery charges paid by customers. The GST charges are for the period 29 October 2019 to 31 March 2022.
This comes months after a show cause notice was issued to Zomato's rival Swiggy, demanding a GST worth hundreds of crores imposed on delivery charges.
However, Zomato responded to the notice on Wednesday and said that the company is “not liable to pay any tax” on the delivery charges, as the amount is collected by the food delivery app on behalf of the delivery partners.
Zomato's response to ₹402 crore GST demand
Responding to the show cause notice issued by the DG of GST Intelligence, Gurugram-based firm Zomato said that the company is not liable to pay the ₹402 crore GST on delivery charges.
{{/usCountry}}Responding to the show cause notice issued by the DG of GST Intelligence, Gurugram-based firm Zomato said that the company is not liable to pay the ₹402 crore GST on delivery charges.
{{/usCountry}}The firm explained that the delivery charges are collected by app on behalf of the partners, and the mutually agreed upon conditions state that the he delivery partners have provided the delivery services to the customers and not Zomato.
The notice by the food delivery company further reads, “This is also supported by opinions from our external legal and tax advisors. The Company will be filing an appropriate response to the SCN.”
Food delivery platforms like Zomato and Swiggy have been liable to pay GST to the Centre on behalf of the restaurants for sales made through the app since January 1, 2022. However, there was no clarity provided by the Centre regarding delivery fee.
Zomato and Swiggy are now consulting lawyers and tax officers to file an official query to the Centre regarding the same, reported The Economic Times.