NEW DELHI: Zomato Ltd, the food delivery platform, has received a tax notice of Rs 402 crore for not paying taxes on delivery charges collected from customers on behalf of delivery partners from October 29, 2019 to March 31, 2022.
The company in a regulatory filing said that the notice was served on December 26 by the Pune Zonal Unit of the Directorate General of GST Intelligence. The notice has been issued under Section 74 (1) of the Central Goods and Services Tax Act, 2017. Zomato, however, has responded by stating that it is not liable for paying any tax as the delivery charges were collected by the company on behalf of the delivery partners, who provided services directly to the customers.
Zomato said it has sought opinions from external legal and tax advisors, who support the company’s stance on the matter. “Zomato intends to submit an appropriate response to the show cause notice. It’s important to note that no order has been issued against the company at this stage.
The company believes it has a strong case on merit,” it said. Tax experts differ with the tax department on the GST demand on delivery charges collected on behalf of the delivery partners. Nitin Jain, partner at SW India, says the delivery fee is for an independent service to the customer and hence the revenue of service providers but not of the platform.
“Since most of these gig workers are likely to be out of the tax net, this could be an indirect attempt to recover taxes by the GST department. In case, the government wants to collect tax on these charges, they should amend law prospectively to fasten the liability on e-commerce platforms like what has been done in the case of passenger transport services or restaurant services,” said Jain.
In addition, ICICI Bank and Kotak Mahindra Bank have also disclosed that they received demand notices from the GST Department. ICICI Bank stated that it received a notice from the Tamil Nadu Goods and Services Tax Department, demanding Rs 24.37 crore with a penalty of Rs 2.43 crore. The notice is based on an assessment of tax payment under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017. ICICI Bank has promptly announced its plan to appeal against the order.
On the same day, Kotak Mahindra Bank faced show-cause cum demand orders from the assistant commissioner of central goods and service tax (GST) and excise in Cuttack, Odisha.