Zomato parent hit with Rs 40 Cr GST demand, plans to appeal

Eternal, the parent of food delivery platform Zomato and quick commerce service Blinkit, has received a tax demand order from the Additional Commissioner of Central GST & Central Excise, Gurugram, for Rs 40.33 crore, covering tax, interest, and penalty for the period July 2017 to March 2020.

According to the company’s exchange filing, the order alleges a GST shortfall of Rs 17.19 crore, interest of Rs 21.42 crore, and a penalty of Rs 1.72 crore.

The breakdown shows that tax authorities have raised demands of Rs 0.90 crore for FY18, Rs 11.27 crore for FY19, and Rs 5.02 crore for FY20, along with corresponding interest and penalty.

Zomato, however, said it does not expect any financial impact from the order. The company stated that it believes it has “a strong case on the merits” and will be filing an appeal against the order in due course.

The notice is the latest in a string of similar tax demands the foodtech major has faced in recent years, particularly around GST applicability on delivery charges and input tax credits. While several such demands are still under litigation, Zomato has consistently maintained that it is not liable to pay the disputed amounts.

A pattern of notices

Over the last two years, Zomato has faced a series of GST-related demands, many tied to whether delivery charges collected from customers are liable for GST and whether the company availed excess input tax credit.

• In December 2024, the company received its largest-ever notice—a Rs 803 crore demand from the Thane GST Commissionerate, covering alleged unpaid tax, interest, and penalty on delivery charges. Zomato has contested the claim, arguing that the delivery fee is collected on behalf of its partners and is not taxable in its hands.

• In September 2024, the West Bengal authorities issued back-to-back demands of Rs 17.7 crore and Rs 9.85 crore, again linked to delivery fee taxation.

• In April 2024, Zomato faced notices of Rs 23.26 crore in Karnataka and Rs 8.6 crore in Gujarat, both related to input tax credit discrepancies.

• The company also received smaller demands in Tamil Nadu (Rs 0.89 crore) and West Bengal (Rs 1.92 crore) in August 2024.

In a relief, a demand of Rs 11.82 crore raised by the Gurugram Commissionerate for FY17-21 was dropped in mid-2024 by the appellate authority.