Deepinder Goyal's Zomato gets Rs 23 crore tax notice from Karnataka tax authorities

Deepinder Goyal-led food delivery platform Zomato has been slapped with a tax notice amounting to Rs 23.26 crore by the Karnataka tax authorities for the financial year 2018-19, which relates to overutilisation of input tax credit and interest, penalty thereon.

The notice demands a GST payment of Rs 11.27 crore, with additional interest and penalty charges, following an audit of GST returns and accounts by the Assistant Commissioner of Commercial Taxes (Audit), Karnataka.

Zomato's ongoing tax challenges

The development comes amidst Zomato's ongoing tax challenges, including a recent GST penalty notice of Rs 8.6 crore from Gujarat's Deputy Commissioner of State Tax and a substantial show cause notice from the Directorate General of GST Intelligence, Pune Zonal Unit.

What did Zomato say?

“Pursuant to Regulation 30 of the Listing Regulations, this is to inform that the Company has received an 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 INR 11,27,23,564, along with applicable interest and penalty totaling to INR 23,26,64,271,” the company said in an exchange filings.

Despite the hefty demand, Zomato said it remains confident in its position and plans to challenge the order before the appropriate authorities. 

It's worth mentioning that the company had responded to the show cause notice with clarifications and supporting documents, although it feels these were not fully considered by the issuing authority.

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

Financial performance amidst tax challenges

Interestingly, Zomato's financial health appears robust, with the company reporting its second consecutive profitable quarter.

For the September quarter of the financial year 2023-24, Zomato reported a profit after tax of Rs 36 crore, marking an 18-fold increase from the previous quarter. Notably, This is a substantial recovery from the Rs 251 crore loss reported in the same quarter of the previous year. 

On the other hand, The revenue also saw an 18% increase to Rs 2,848 crore compared to the June quarter of the same fiscal year.