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Zomato, a prominent food delivery platform, is facing a show-cause notice from Indian tax authorities for ₹401.7 crore (around $54 million). The notice questions Zomato's liability for this tax amount, encompassing interest and penalties, related to delivery charges collected over a span of two and a half years, from October 29, 2019, to March 31, 2022. Zomato has strongly refuted the claims, asserting that it is not obligated to pay any tax on delivery charges as these are collected on behalf of its delivery partners. The company plans to submit a detailed response to the show-cause notice.
This development is part of a broader examination by Indian tax authorities, focusing on the failure of food delivery platforms, including Zomato and Swiggy, to pay goods and services tax (GST) on delivery fees. Zomato has clarified that no official order has been issued yet and maintains confidence in its robust case against the alleged tax demand. The disclosure is viewed as a precautionary measure by Zomato, considering the potential significance of the tax claim.
In a parallel development, Bata India, a major footwear retailer and manufacturer, has received a show-cause notice for ₹60.56 crore (approximately $8.1 million) from a state tax officer in Chennai. The notice, issued on December 27, follows an initial audit notification and an audit report outlining various concerns. Bata India has expressed confidence in its ability to defend against the issues raised and anticipates no significant financial impact.
These incidents underscore the heightened scrutiny by tax authorities across diverse sectors, particularly digital platforms, aiming to ensure compliance with tax regulations and revenue collection. The resolution of these cases may set precedents for similar businesses operating in India, influencing their tax practices and obligations.
