Zomato stock falls after show cause notice for Rs 400 crore GST dues

New Delhi: Shares of Zomato fell over 4 per cent on Thursday morning after it received a show cause notice of Rs 400 crore from Goods and Services Tax (GST) authorities over unpaid dues collected as “delivery charges”. Were doing business.

The Directorate General of GST Intelligence (DGGI) had last month issued a demand notice to Zomato and its rival Swiggy, asking them to pay pending dues of over Rs 400 crore and Rs 350 crore, respectively.

According to media reports, the show cause notice to Zomato is for the period between October 29, 2019 to March 31, 2022.

The food delivery platform said it “firmly believes that it is not liable to pay any taxes as the delivery charges are collected by the company on behalf of the delivery partners”.

In a regulatory filing, Zomato said that in view of the mutually agreed contractual terms and conditions, “the delivery partners provide delivery services to the customers and not to the company”.

“The company will file an appropriate reply to the show cause notice (SCN),” Zomato said.

“At this stage, no order of any kind has been passed and as stated above, the company believes that its case is strong on merits,” the company said. Last month, Zomato and Swiggy had received GST notice on delivery charges.

According to Zomato and Swiggy, ‘delivery charge’ is nothing but the cost borne by the delivery partners who go to deliver food from door to door.

Swiggy recently increased the platform fee for food orders from Rs 2 to Rs 3.

A Swiggy spokesperson had told IANS that there has been “no significant change on platform charges, which is implemented by most service players and is a common practice across industries”.

Zomato had earlier increased its platform fee from the initial Rs 2 to Rs 3 per order.