Swiggy, which is preparing for an IPO, is facing a GST demand of INR 327 crore.

Swiggy's co-founder and CEO, Sriharsha Majety, faced a notice last year from the Deputy Labour Commissioner in Lucknow over allegations of employing child labor. In its updated Draft Red Herring Prospectus (DRHP) filed with SEBI, Swiggy outlined plans for an IPO, including a fresh share issuance valued at up to INR 3,750 crore and an Offer for Sale (OFS) component of up to 18.53 crore shares.

The food tech company is also contending with potential GST liabilities amounting to INR 326.7 crore, as revealed in the DRHP. The Directorate General of GST Intelligence (DGGI) issued a demand notice in December 2023, claiming Swiggy failed to pay taxes on delivery fees collected from customers between July 2020 and March 2022. The DRHP stated, "In December 2023, our Company received show cause notices from the GST authorities requiring our company to show cause why a tax liability of INR 326.7 Cr along with interest and penalty for the period from July 2020 to March 31, 2022, should not be demanded and recovered." The company noted it would monitor the situation and address any future proceedings but warned that an unfavorable outcome could adversely affect its financial condition and operations.

Swiggy’s rival, Zomato, also faces multiple GST demand notices from various states, including a recent INR 18 crore penalty from West Bengal, following similar notices from authorities in Delhi, Tamil Nadu, and Karnataka.

In addition to GST issues, Swiggy is involved in several legal challenges, including:

- A notice issued to CEO Sriharsha Majety regarding allegations of child labor.

- A criminal complaint by a DGGI official in Hyderabad against top executives for misusing input tax credits and providing false information, currently pending in court.

- A case filed by the National Restaurant Association of India (NRAI) alleging competition law violations.

The DRHP also highlighted high employee attrition rates at Swiggy, which stood at 53.74% for the fiscal year 2023-24, up from 50.49% the previous year and 37.1% in FY22. Of this, voluntary attrition was recorded at 34.56%, while involuntary attrition was at 19.18%.

Swiggy filed its updated DRHP on September 26, stating that it intends to use the fresh funds for its subsidiary Scootsy, marketing efforts, technology investments, acquisitions, and general corporate purposes. The company reported a 44% reduction in losses to INR 2,350 crore in FY24, down from INR 4,179.3 crore in FY23, with operating revenue increasing by 36% to INR 11,247.3 crore. However, for Q1 FY25, the startup's net loss widened by 8% to INR 611 crore, compared to INR 564.08 crore in the same period last year, though it managed to reduce its adjusted EBITDA loss to INR 347.8 crore from INR 486.8 crore in the previous year. Revenue from operations grew by 35% year-on-year to reach INR 3,222.2 crore in the quarter.