Zomato Hit with Rs 11.81 Crore GST Demand and Penalty; Appeals Order
Food delivery giant Zomato recently revealed that it received a Goods & Services Tax (GST) demand and penalty order totaling Rs 11.81 crore for the period from July 2017 to March 2021. The order includes a GST demand of Rs 5.9 crore along with a corresponding penalty of Rs 5.9 crore.
The demand primarily relates to export services provided by Zomato to subsidiaries outside India during the mentioned period. In response to the show cause notice preceding the demand order, Zomato provided clarifications supported by documentation and legal precedents. However, the company expressed dissatisfaction with the authorities’ response, citing a lack of appreciation for their submissions.
Zomato has decided to challenge the order by lodging an appeal with the relevant appellate authority.
Zomato’s shares closed 1.78 per cent higher at Rs 188.50 on the NSE on April 19, despite the GST-related setback.
Earlier in the same week, Zomato introduced a new service called the ‘large order fleet’ to efficiently handle substantial orders for gatherings, parties, and events. CEO Deepinder Goyal made the announcement on social media, highlighting that this fleet exclusively comprises electric vehicles.
Goyal emphasized that this new fleet is specifically tailored for gatherings hosting up to 50 individuals, filling a previously unmet need in their service portfolio. He mentioned that these electric vehicles should address most of the challenges faced by customers when placing large orders on Zomato.
Explaining the rationale behind this initiative, Goyal mentioned that Zomato had previously managed large orders through multiple delivery agents, leading to suboptimal customer experiences. With the new feature, still in its early stages, Zomato plans to incorporate additional features such as cooling compartments and hot boxes with temperature control to enhance customer satisfaction further.
Zomato’s move to appeal the GST demand and penalty order shows its commitment to resolving regulatory issues while simultaneously innovating to improve its services. The introduction of the ‘large order fleet’ reflects the company’s responsiveness to customer needs and its drive towards sustainability with the adoption of electric vehicles in its delivery operations.
