Food delivery giant Zomato finds itself in the regulatory spotlight after revealing that it has been slapped with a GST demand and penalty order totaling Rs 11.81 crore. The period under scrutiny spans from July 2017 to March 2021, as disclosed in a regulatory filing made by the company after market hours on Friday.
According to the filing, the demand order comprises a GST demand of Rs 5.9 crore, accompanied by an equivalent penalty amounting to the same figure. The order, issued by the Additional Commissioner of Central Goods and Services Tax in Gurugram, revolves around export services rendered by Zomato to its subsidiaries located outside India during the specified period.
Zomato has not disclosed the interest amount applicable to the GST demand in its regulatory filing. However, the company did emphasize that it had responded to the show cause notice pertaining to this matter with detailed clarifications supported by pertinent documents and legal precedents. Despite this effort, Zomato expressed disappointment that its submissions were seemingly disregarded by the authorities in their decision-making process.
Zomato's next steps are anticipated to involve navigating this issue through legal avenues while continuing to engage with tax authorities to address the demand and penalty. The intricacies of tax regulations, particularly in the realm of cross-border transactions and export services, have once again come to the forefront with this development. The company's transparent handling of the situation underscores its commitment to adhering to applicable legal frameworks. However, the ramifications of this GST demand and penalty order on the company's financials and operations remain uncertain as Zomato evaluates its options for recourse and resolution.
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