Shares of Zomato Ltd., a major player in the food delivery and quick commerce space, fell over 2% in early trade on December 13 following a hefty tax notice from the GST department.
GST Demand Details
The Joint Commissioner of CGST & Central Excise in Thane, Maharashtra, has demanded Rs 803.4 crore from Zomato. This includes:
- GST dues of Rs 401.7 crore
- An equal amount as a penalty
- Applicable interest
The notice pertains to the period between October 29, 2019, and March 31, 2022, and revolves around the alleged non-payment of GST on delivery charges.
At 9:20 am, Zomato’s shares were trading at Rs 282.5, down 0.84% on the NSE.
Zomato’s Response
Zomato has expressed confidence in its legal standing and plans to appeal against the order. “We believe that we have a strong case on merits, supported by opinions from our external legal and tax advisors,” the company said in its regulatory filing.
Analysts remain unfazed by the setback, with most of them arguing that Zomato is still ahead of the game. In its newsletter last December, Ambit Asset Managers counted the company’s cost-efficient operations and strong advertising revenues as major pluses over competition. Unlike rivals who resort to unsustainable discounting, Zomato’s model is considered more stable and difficult to replicate.
Zomato has also raised Rs 8,500 crore through the QIP route in November last year at a share price of Rs 252.62 each. It has already identified investing as much as Rs 2,137 crore from those QIP funds in the Blinkit expansion, for building dark stores and warehouses.
The existing issues of Zomato with the GST department may weigh on investor sentiments in the near term, but its strong fundamentals and market leader positioning continue to offer long-term growth potential.
Do you have a news tip for Lakshmishree reporters? Please email us at media@lakshmishree.com
Source: Moneycontrol
News Desk
