Zomato Ltd, an online meal delivery company, on 28 December, announced in a regulatory filing that it received a show-cause notice regarding delivery charges totalling Rs 401.7 crore and its possible GST liability.

Retorting that it collects delivery charges on behalf of delivery partners, the company said that it is not obligated to pay the amount.

In its regulatory filing, the company said that in compliance with Section 74(1) of the Central Goods and Services Tax Act, 2017, the company received a Show Cause Notice (SCN) from the Pune Zonal Unit of the Directorate General of GST Intelligence on December 26, 2023.

To avoid having to pay an estimated Rs 401.7 crore in unpaid taxes, interest, and penalties from October 29, 2019, to March 31, 2022, the SCN requests that the company provide an explanation.

The company said, “The amount claimed in the SCN is based on the amounts collected by the company as delivery charges from the customers on behalf of the delivery partners during the referred period.”

Zomato asserted that it “strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners.”

In addition, the delivery partners have fulfilled the contractual obligations to the mutually agreed-upon terms and conditions by providing the delivery services to the customers rather than the company. The document also included the opinions of our outside legal and tax counsel who support this.