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Zomato, a prominent player in the foodtech industry, has been issued a GST demand and penalty order totaling Rs 11.82 crore. The order, issued by the Additional Commissioner, Central Goods and Services Tax, Gurugram, comprises a GST demand of Rs 5.9 crore and an equivalent penalty amount for the period spanning July 2017 to March 2021. The demand primarily pertains to export services provided by Zomato to its foreign subsidiaries.
In response to the order, Zomato has announced its intention to contest it, citing confidence in having a "strong case on merits." The company plans to file an appeal before the appropriate authority. Zomato asserts that it had previously addressed the allegations during the show cause notice phase with supporting documents and judicial precedents but feels these were not adequately considered by the tax authorities.
Furthermore, this development coincides with Zomato's strategic decision to scale back its international operations. The company has been gradually shutting down its ventures in various countries, including Vietnam, Poland, Singapore, the UK, the US, and South Africa, focusing instead on its core markets in India due to minimal contributions from international operations to overall revenues.
It's worth noting that Zomato has encountered tax challenges in the recent past. On April 2, the company faced a service tax demand and penalty order exceeding Rs 184 crore for non-payment issues from October 2014 to June 2017. Additionally, on April 1, the Karnataka Commercial Taxes Authority demanded Rs 23 crore for alleged discrepancies related to excess input tax credit under GST rules.