Zomato receives GST demand notice of ₹23 crore from Karnataka commercial tax department

Food delivery giant Zomato Ltd has received a goods and services tax (GST) demand notice of ₹23 crore from the Karnataka tax authorities.

In a notification to exchanges on Sunday, March 31, Zomato said, “The company has received a demand order for FY 2018-19 pursuant to the audit of GST returns and accounts by the Assistant Commissioner of Commercial Taxes (Audit), Karnataka, raising demand of GST of ₹11,27,23,564, along with applicable interest and penalty totalling to ₹23,26,64,271.”

Zomato said that the demand order has been received in respect of availing excess input tax credit and interest, penalty thereon.

The company in its response to the show cause notice had clarified on the issue along with relevant documents and judicial precedents, it added.

Zomato said that it had a strong case to defend the matter before the appellate authority and did not expect any financial impact on the company.

“We believe that we have a strong case on merits and the company will be filing an appeal against the order before the appropriate authority,” the notification said.

Shares of Zomato seemed to be unfazed by the development. On Monday, the stock jumped as much as 3% to hit a high of ₹188 in the opening session on BSE. The stock had touched its 52-week high of ₹188.95 last week on Wednesday, March 27.

This is the second GST notice received by the company in March. Earlier on March 16, Zomato had informed stock exchanges regarding the GST demand order of ₹8.58 crore received from deputy commissioner of state tax, Gujarat.

The demand order from Gujarat had been received in respect of availing excess input tax credit and short payment of GST on account of audit observations and interest, penalty thereon.