- Zomato received a show cause notice from the Directorate General of GST Intelligence, seeking Rs 401.70 crore in tax liability for the period between October 2019 and March 2022.
- The notice is related to the sum collected by Zomato as delivery charges from customers on behalf of delivery partners during that period.
- Zomato contends that it is not liable for the tax, as the delivery charge was collected for delivery partners who provided services to customers based on mutually agreed contractual terms.
- In January 2022, changes in GST rules mandated food delivery companies like Zomato to pay 5% GST on restaurant services offered, but it did not address delivery charges specifically.
- Despite reporting a loss of Rs 251 crore in Q2 FY23, Zomato turned profitable in Q2 FY24 with a profit after tax of Rs 36 crore, marking an 18-fold increase.