Deepinder Goyal's Zomato once again gets tax demand and penalty order of Rs 184 crore

Deepinder Goyal-led food delivery platform Zomato finds itself grappling with a significant financial hiccup. The company has received a service tax demand and penalty order totaling more than Rs 184 crore. 

The demand stems from alleged non-payment of service tax during the period from October 2014 to June 2017. The authorities calculated this amount based on sales made by Zomato’s foreign subsidiaries and branches to customers outside India.

The basis of the demand

The tax authorities have scrutinized Zomato's international transactions, identifying these sales as the basis for the substantial service tax demand. Zomato, on its part, has responded to the initial show cause notice and provided clarifications, supporting documents, and references to judicial precedents.

Despite this, the Delhi Central Tax Commissioner (Adjudication) issued an order on April 1, comprising both the demand for service tax and an equivalent penalty, each amounting to Rs 92,09,90,306.

"Pursuant to Regulation 30 of the Listing Regulations, this is to inform that the Company has received an order for the period October 2014 to June 2017 passed by the Commissioner, Adjudication, Central Tax, Delhi raising demand of service tax of INR 92,09,90,306/-, along with applicable interest (not quantified) and penalty of INR 92,09,90,306/-," the company said in an exchange filing.

What did Zomato say?

Zomato remains steadfast in its belief that it has a strong case, supported by merits that the tax authorities did not appreciate in their order. The company said it plans to appeal against this order before the appropriate authority. 

"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," the company said. 

It's worth noting that this isn't Zomato's first encounter with tax-related challenges. The Karnataka commercial taxes authority previously issued a demand notice of Rs 23 crore to Zomato for availing excess input tax credit under the GST rules.