Food delivery giant Zomato is in the spotlight as it receives a show-cause notice from the Directorate General of GST Intelligence (DGGI) for a hefty Goods and Services Tax (GST) demand of ₹401.7 crore. The notice revolves around alleged non-payment of GST on delivery charges, putting Zomato in a challenging position.
GST Notice Over ₹401.7-Crore Tax Liability:
DGGI issues a show-cause notice to Zomato for a GST demand of ₹401.7 crore.
The notice pertains to the non-payment of GST on delivery charges.
Delivery Charges Under GST Scanner:
DGGI contends that delivery charges fall under the services category, attracting 18% GST.
Swiggy also receives tax notices in connection with the same issue.
Stock Price Decline:
Zomato’s stock faces a decline following the GST notice.
Share prices drop as investors react to the potential financial implications.
Tax Demand Period:
The tax demand covers the period from October 29, 2019, to March 31, 2022.
Zomato acknowledges receipt of the notice and plans to respond appropriately.
Zomato’s Defense:
Zomato argues that it is not liable to pay tax as it collects delivery charges on behalf of its delivery partners.
The company asserts its intention to file a fitting response to the show-cause notice.
Market Response:
Zomato’s stock experiences a 3.03% decline, reaching Rs 123.20 on the NSE.
Investors closely monitor the situation as the stock trades lower amidst the GST controversy.
Zomato finds itself in a challenging position as it confronts a substantial GST demand of ₹401.7 crore. The DGGI’s show-cause notice has prompted a decline in the company’s stock prices. Zomato’s argument that it collects delivery charges on behalf of its partners adds complexity to the situation. As the company prepares a response, investors and the market await further developments in this unfolding tax controversy.
