The Indian food delivery giant, Zomato, on Wednesday received a show cause notice from the Directorate General of GST over non-payment of GST. The show cause notice was sent to the Gurugram-based food aggregator, demanding the company to answer why they haven’t paid a tax of over ₹402 crore on the food delivery charges along with the interest and penalties.
According to the directorate general of GST, the company hasn’t paid taxes on the delivery charges they take from their customers for the period of 29 October 2019 to 31 March 2022. It is worth noting that a few months ago, Zomato’s archnemesis, Swiggy also received a show and cause notice over unpaid GST on delivery charges.
However, Zomato has said that they are not liable for any tax as the delivery charges taken from customers are taken on behalf of the delivery partner and it has nothing to do with the company. The company has also said that this is backed by the company’s financial and legal advisor, and it will give an appropriate response to the show cause notice. Zomato is one of the leading food aggregators in India and Zomato owner’s success story is well known to everybody.
Food Aggregators like Zomato and Swiggy were made liable to pay the central goods and services tax on delivery charges from 1st January 2022, but there was no regulation or clarity provided by the centre on this matter which left the company in a grey area. It’s yet to be seen if the company will pay the GST or fight for its side of the argument.
