Zomato Ltd Asked To Pay a Penalty of ₹8.5 crore by Gujarat Tax Authorities

On March 18, 2024, Zomato share price of an online food delivery company was in focus after receiving a tax notice from Gujarat tax authorities. On March 16, 2024, the company, in an exchange filing, stated that it had received an order for FY 2018-19 pursuant to the audit of GST returns and accounts by the Deputy Commissioner of State Tax, Gujarat, on March 15, 2024. The order raises a demand of GST of ₹4,11,68,604/-, along with applicable interest and penalty totalling ₹8,57,77,696.

The demand order has been received with respect to excess availment of input tax credit and short payment of GST on account of audit observations and interest, as well as penalty thereon. The company, in its response to the show cause notice, had clarified all the issues along with relevant documents, circulars, etc., which appears not to have been fully considered by the authorities while passing the order.

Zomato Ltd believes that it has a strong case to defend the matter before the appellate authorities without any financial impact. On March 18, 2024, the share price of Zomato Ltd opened at ₹162.35 and touched the day low of ₹157.60 at 11:49 PM. In the span of one year, the shares of Zomato generated a return of ~199.35%.

On February 15, 2024, the company mentioned in an exchange filing that its step-down subsidiary, Zomato Malaysia Sdn. Bhd has commenced the process of liquidation w.e.f. February 15, 2024. Zomato Malaysia does not have any active business operations as per Zomato’s prospectus dated July 19, 2021.

Zomato Ltd stated that Zomato Malaysia Sdn. Bhd is not a material subsidiary of the company, and the dissolution of Zomato Malaysia will not affect the company’s turnover/revenue.

About Zomato Ltd

Zomato Limited was incorporated in 2010. The company is one of the leading online Food Service platforms in terms of the value of food sold. Zomato’s offerings include food delivery, dining-out services, Loyalty programs, and others. During Q3 FY2024, the company reported a YoY growth of 65.3% in revenue to ₹3,507 crore. On a quarterly growth basis, Zomato Ltd has generated a 14.61% jump in its revenue in the last 3 months.

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