Food delivery giant Zomato has received a Good and Services Tax (GST) notice on a tax liability of ₹401.7 crore. The Directorate General of GST Intelligence (DGGI) had sent tax notices to Zomato and Swiggy for not paying GST on delivery charges and said that delivery charges fall under the services category and companies are liable to pay 18 percent GST.
Zomato responded to a show-cause notice issued by DGGI and said that it is not liable to pay any tax and said, “Delivery charges are collected by the company on behalf of the delivery partners. Further, as per the terms of the mutual agreement, the delivery partners have agreed to provide delivery services to the customers. did, not the company.”
“This is also supported by the opinion of our external legal and tax advisors. The company will file an appropriate response to the show cause notice,” Zomato said in a public statement.
The tax authority asked Zomato to pay penalties and interest for failure to pay tax on delivery charges collected from customers on behalf of delivery partners between October 2019 and March 2022.