Zomato gets ₹401 cr showcause notice over delivery charges

Tax notice on 26 December is based on the delivery charges collected from customers over two-and-a-half years

- Suneera Tandon

Food delivery giant Zomato has received a ₹ 401.7 crore show-cause notice for delivery charges collected over two and a half years. The notice, dated 26 December, asks why Zomato shouldn't be liable for this tax amount, including interest and penalties, for the period from 29 October 2019 to 31 March 2022.

Zomato, in a notification to stock exchanges on Thursday, refuted the claims, arguing that it was "not liable" to pay any tax on the delivery charges, as these are collected on behalf of delivery partners. 

"Further, in view of the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company. This is also supported by opinions from our external legal and tax advisors. The company will be filing an appropriate response to the show cause notice," the company added.

Zomato said it received a show-cause notice under Section 74(1) of the Central Goods and Services Tax Act, 2017, from the Directorate General of GST Intelligence, Pune Zonal Unit.