5 months ago

Zomato responds to ₹402 crore GST show cause notice, says not liable to pay the amount



IIE Digital Desk: Zomato, the online food ordering platform has recieved a show cause notice of ₹402 crore from GST authorities for unpaid tax on deliver fee charged by the platform from customers, the company said in a BSE filing

The company however reposnded by saying it is not liable to pay the tax amount as the charges are collected on behalf of delivery partner.

"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,” stated Zomato.

The notice contains penalty along with interest from October 29, 2019 to March 31, 2022. Zomato said the company should mot be demanded to pay the amount as it is not company's charges.

"Zomato charging for deliveries might mean they need to pay taxes on those fees. Who pays these charges matters a lot. If Zomato collects the delivery fees from customers, they're responsible for paying taxes on that. The tax authorities think this is fair because when people order through Zomato, they don't know the delivery person, they only know Zomato. But whether these fees are actually wages for delivery people or something else is still unclear. It depends on the agreements between Zomato, the restaurants, and the delivery folks. This makes it a complicated tax situation." - Abhishek Rastogi, Tax expert

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