Zomato receives Rs 402 crore show cause notice over unpaid GST on delivery charges

economictimes.indiatimes.com:

Zomato has received a Rs 402 crore show cause notice from the goods and services tax (GST) authorities over unpaid tax on delivery charges collected from customers, the company said in a BSE filing late Wednesday.

The Gurugram-based company said it received the notice on December 26 to show cause as to why an alleged tax liability of the said amount for the period October 29, 2019 to March 31, 2022 should not be demanded from the company.

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In November, the Directorate General of GST Intelligence (DGGI) had issued pre-demand notices to Zomato as well as its Bengaluru-based rival Swiggy, seeking GST of Rs 750 crore.

The key point of contention here is that the government is asking the food delivery platforms to pay GST on delivery fees collected by them from the customers, whereas the companies argue that the said charges are only collected on behalf of delivery partners.

“The company 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. 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 SCN (show cause notice),” it said in the filing.

Also read | Tax troubles: Swiggy and Zomato grapple with freshly served GST notice on delivery fee

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