Online food delivery giant Zomato said on Thursday that it is not liable to pay any tax on delivery charges after the company received a show cause notice from the Directorate General of GST Intelligence (DGGI).
The notice, issued under Section 74(1) of the Central Goods and Services Tax Act, 2017, demanded an explanation from Zomato regarding an alleged tax liability amounting to Rs 401.70 crore. This includes interest and penalties for the duration spanning from October 29, 2019, to March 31, 2022
In response to this development, Zomato issued a statement to the stock exchanges, stating its strong belief that it is not liable to pay any tax in this regard.
According to the company, the delivery charge is collected on behalf of the delivery partners who, as per contractual terms and conditions, provide services directly to the customers. Zomato emphasized that this position is reinforced by opinions from its external legal and tax advisors.
“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,” Zomato said.