Zomato and Blinkit parent Eternal hit with Rs 128-crore GST demand from Uttar Pradesh tax authorities

Adding to its mounting tax troubles, Zomato and Blinkit parent Eternal has received a goods and services tax (GST) demand order totalling Rs 128.4 crore, including a demand of Rs 64.2 crore and an equivalent penalty, from the State Tax Department in Uttar Pradesh.

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The order, issued by the Deputy Commissioner, State Tax, Lucknow, pertains to the period between April 2023 and March 2024 and alleges short payment of output tax and excess availment of input tax credit. Eternal disclosed the development in a filing with the stock exchanges on Sunday.

“The company has received an order on October 18, 2025, confirming a demand of GST of Rs 64.2 crore with applicable interest and a penalty of Rs 64.2 crore,” the filing stated.

Eternal said it intends to contest the order, claiming a “strong case on merits,” and will file an appeal before the appropriate authority.

This latest demand compounds the company’s ongoing tax challenges across multiple states. Over the past two years, Eternal has received several GST-related notices, including:

• Rs 401.7 crore from Maharashtra in late 2023,

• Rs 2.2 crore from Delhi in May 2024,

• Rs 4.6 crore from Tamil Nadu in August 2024,

• Rs 17.7 crore from West Bengal in September 2024,

• Rs 803.4 crore from Maharashtra again in December 2024,

• Rs 1.3 crore from Uttar Pradesh in August 2025, and

• Rs 40 crore from Karnataka in August 2025.

The Uttar Pradesh demand comes shortly after Eternal announced its Q2 FY26 financial results, where the company’s consolidated net profit fell 63% year-on-year to Rs 65 crore, compared with Rs 176 crore in the same quarter last year. Despite the profit decline, operating revenue surged 183% to Rs 13,590 crore, driven primarily by Blinkit’s growth.

Blinkit’s revenue rose nearly ninefold year-on-year, to Rs 9,891 crore in the quarter, after the company shifted to an inventory-led model that gives it greater control over operations and product mix. However, this rapid expansion has also led to higher capital expenditure, particularly in setting up new dark stores.

Meanwhile, Zomato’s core food delivery business has seen slower growth amid muted discretionary spending and rising competition from the quick commerce segment.

Eternal’s management has also highlighted the impact of GST 2.0 regulations, under which “local delivery services” now attract an 18% GST when delivery partners are not GST-registered. The tax applies to delivery charges passed on to customers, affecting about a quarter of Zomato’s orders.

In its latest shareholder letter, CFO Akshant Goyal said the company decided to pass this additional tax burden to customers, leading to a slight moderation in order volumes.

Eternal, which rebranded from Zomato in March 2025, now operates a diversified portfolio across food delivery, quick commerce, restaurant supplies (Hyperpure), and events and ticketing (acquired from Paytm).