Zomato receives tax demand notice worth ₹184 crore

Online food delivery platform Zomato Ltd has said in an exchange filing it has received a service tax demand along with a penalty worth over ₹184 crore on account of non-payment of service tax for the period October 2014 to June 2017. This was determined on the basis of certain sales made by the foreign subsidiaries and branches of the company to its customers located outside India, it stated.

Zomato pointed out it has clarified on the allegations along with supporting documents and judicial precedents, which appears to not have been appreciated by the authorities while passing the order.

“The company believes that it has a strong case to defend the matter before the relevant appellate authority and does not expect any financial impact on the company,” it said in the filing.

Shares of Zomato were trading over 1% lower at ₹180.90 in morning trade. The stock, however, has given a handsome return of over 45% since the beginning of 2024.

During the quarter-ended December 2023, Zomato reported a 69% year-over-year growth in its operating revenue at ₹3,288 crore. The company reported a net profit of ₹138 crore compared to a net loss of ₹347 crore, in the same quarter a year ago. Zomato had reported that its gross order value (GOV) across the B2C businesses grew 47% year-over-year to ₹12,886 crore.

The company’s consolidated adjusted EBITDA was positive for the third consecutive quarter at ₹125 crore. Zomato CEO Deepinder Goyal had said during the results that the company expects the topline to continue growing at over 50% year-over-year and added that margin expansion and GOV growth will drive further improvement in absolute profits.

Recently the food-delivery platform launched the Zomato Restaurant Hotline through which its restaurant partners can connect to a team of growth managers, dedicated to understanding their specific needs. The hotline service will also provide priority support to our restaurant partners for their day-to-day queries, it had said.