Zomato gets Rs 184 cr service tax, penalty order

Food-delivery platform Zomato said it has received a service tax demand and penalty order aggregating more than Rs 184 crore.

The demand order is related to the non-payment of service tax from October 2014 to June 2017, according to the company.

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The tax was determined on the basis of certain sales made by the company’s foreign subsidiaries and branches to its customers located outside India, the company said in a regulatory filing.

“We believe that we have a strong case on merits and the company will be filing an appeal against the order before the appropriate authority,” the platform said.

The company, however, expects no financial impact from this development.

Earlier, Zomato saw its international operations as a key growth area, but overseas revenue comprised a minute portion of its earnings, after which the platform has been shutting down its international business.

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ET had earlier reported that the Gurugram-based company had shuttered almost all of its international subsidiaries including those in Singapore, the United Kingdom, United States and South Africa.

On January 5, ET reported that Zomato initiated the liquidation process for its Vietnam business. Prior to this, it had commenced the liquidation process for its business in Poland on December 2.

According to the company, the liquidation of its subsidiaries will not have any impact on the overall operations of the company as it was not engaged in any active business operations in these foreign markets.

Recently, the Karnataka commercial taxes authority issued a tax demand notice of Rs 23 crore on Zomato. The demand had been issued for availing excess input tax credit under the goods and services tax (GST) rules.

On March 15, another notice for Rs 8.6 crore was raised with Zomato by the deputy commissioner of state tax, Gujarat.

On Tuesday, Zomato’s share ended at Rs 183.05, down 0.81% from its previous close on the BSE.

Harry Byrne

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