On September 14, Zomato announced its decision to challenge a GST order from the West Bengal government, which demanded a total of Rs 5.6 crore for the period from April 2020 to March 2021, including GST, interest, and penalties. Initially, the company had indicated it might pay the amount due to the high cost of litigation, but it has now confirmed plans to file an appeal.
In a previous disclosure on September 13, Zomato stated, “While the company believes that it has a strong case on merits, however, given the amount involved and the cost of litigation, the company shall pay the applicable amounts to the GST authorities.” This stance was later revised with the company now stating, “The company believes that it has a strong case on merits and will be filing an appeal against the order before the appropriate authority.”
The demand of the West Bengal government includes a sum of over Rs 4 crore due towards the interest and penalties. This is the second notice under GST which the food delivery startup has received from that state. In August 29, the company had received a demand notice of Rs 3.69 crore pertaining to GST charged on delivery fee for the period starting April’2019 to March ‘2020, against which too Zomato is likely to file an appeal.
These two orders from West Bengal add to the list of GST-related demands that Zomato has received in the past few months. In August, it received a notice of Rs 3.5 lakhs from Delhi and a Rs 4.59 crore notice from Tamil Nadu. Over the year, Zomato has been in the crosshairs of the taxmen in Karnataka, Haryana, and Gujarat.
Of course, there are the tax challenges. Despite the above, Zomato revenues have grown well. The company posted a profit of Rs 253 crore for Q1 FY25 against Rs 2 crore in Q1 FY24. Revenue from operations leaped 74 percent at Rs 4,206 crore compared to Rs 2,416 crore in Q1 FY24.
Shares of Zomato had closed 3.7 percent lower at Rs 273.50 on September 12, though the stock has surged 150 percent since the beginning of this year, far outpacing the Nifty 50, which rose 17 percent in the same period.
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Source: Moneycontrol
News Desk
