Mumbai
Food and grocery delivery company Zomato has received a tax demand notice of Rs 803.4 crore from the Goods and Services Tax (GST) Department. The company gave this information to the stock exchange on Thursday. A day after this, on Friday morning itself, BSE Sensex had fallen by more than 500 points. Even then its shares were trading higher than the closing price of the previous day.
what is the matter
The tax notice that Zomato has received from the GST department includes a tax demand of Rs 401.7 crore and penalty and interest of the same amount. This demand pertains to tax outstanding for the period October 29, 2019 to March 31, 2022.
What did Zomato tell?
“We believe we have a strong case on the merits, supported by the opinion of our external legal and tax advisors,” Zomato said in a stock exchange filing. The company will file an appeal against the order before the appropriate authority.” The tax demand notice that the company has received pertains to tax applicability on delivery charges collected by aggregators like Zomato and Swiggy. The platform has argued that gig workers work as delivery partners and are paid based on orders. Users are charged a fee for this delivery, except through loyalty programs, where the platforms waive the fee. This delivery fee is given to the gig worker.
What does GST law say?
Under GST laws, delivery of food is a service that is taxable at the rate of 18%. The government believes that since the platforms are collecting service charges, they should pay taxes. In December last year, GST officials had sent a show cause notice to Zomato on this issue.
The company is making profit
Zomato had earned operating revenue of Rs 4,799 crore in the last July-September quarter. In the same month the company had made a net profit of Rs 176 crore.
What is the condition of shares in the stock market?
Last Thursday, Zomato’s share price fell 2.4% to close at Rs 284.90 on the BSE. But today i.e. on Friday at 10:20 am BSE Sensex was down by 791 points. But at that time Zomato was trading at Rs 286.55. This is Rs 1.65 or 0.58% higher than yesterday’s close.
