Online food delivery firm Zomato has been served a Rs 401.7 crore GST liability show cause notice over delivery charges, the company said in a BSE filing. 

Zomato said that it received the GST notice on 26 December. In the notice, a reply has been sought from the company regarding the demand for outstanding tax. This tax liability is on unpaid tax on delivery charges and is for the period from 29 October 2019 to 31 March 2022. 

Zomato, however, asserted that it is not liable to pay the amount, as the delivery charge is collected by it on behalf of delivery partners.  

The company received a Show Cause Notice (SCN) on December 26, 2023, under Section 74(1) of the Central Goods and Services Tax Act, 2017 from the Directorate General of GST Intelligence, Pune Zonal Unit, it said in the filing. 

The SCN requires the company to show cause as to why an alleged tax liability of Rs 401.7 crore, along with interest and penalty, for the period from October 29, 2019, to March 31, 2022, should not be demanded from it. 

"The amount alleged in the SCN is based on the amounts collected by the company as delivery charges from the customers on behalf of the delivery partners during the referred period," it said.  

Zomato asserted that it "strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners." 

"Further, given the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company. This is also supported by opinions from our external legal and tax advisors," the filing said.  

The company will be filing an appropriate response to the SCN, Zomato added. 

It has also received pre-demand notice earlier. The Directorate General of GST Intelligence (DGGI) sent a pre-demand notice of Rs 750 crore to Zomato and competitor Swiggy in November. All these questions being raised regarding tax liability between food delivery companies and the GST department are related to delivery charges.