The shares of the online food delivery company fell around 5 percent after receiving show cause notice of Rs. 402 crores over unpaid GST. On a YTD basis, the shares have delivered a multibagger return of 100 percent to its shareholders.
With a market capitalisation of Rs. 1,06,927 crores, the shares of Zomato Ltd started Thursday’s trading session on a lower note at Rs. 124.90 compared to its previous close of Rs. 127.05. The share hit a low of Rs. 120.60, making a loss of around 5 percent and are currently trading at Rs. 122.15 apiece.
The company on Wednesday announced that it had received a show cause notice from the Directorate General of GST Intelligence for non-payment of Central Goods and Services Tax (GST) on delivery charges in the past.
The notice has demanded the company to show cause for not paying GST of Rs. 402 crores, during the period 29 October 2019 to 31 March 2022 that were collected allegedly on the delivery charges paid by customers.
However, the company has responded to the notice and said that they are “not liable to pay any tax” on the delivery charges, as the amount is collected by the company on behalf of the delivery partners.
Furthermore, the firm explained that the delivery charges are collected by app on behalf of the partners, and the mutually agreed-upon conditions state that the delivery partners have provided the delivery services to the customers and not to the company.
And also stated that this is supported by opinions from the company’s external legal and tax advisors and also mentioned that they will be filing an appropriate response to the SCN.
Food delivery platforms like Zomato and Swiggy have been liable to pay GST on behalf of the restaurants for sales made through the app since January 1, 2022. However, there was no clarity provided by the Centre regarding the delivery fee.
Coming onto the financial statements published by the company, the revenue increased by around 18 percent from Rs. 2,416 crores Q1 FY24 to Rs. 2,848 crores during Q2 FY24. In addition, the net profits showed positive growth during the quarter. During the same timeframe, the net profit increased from Rs. 2 crores to Rs. 36.18 crores.
As of FY23, 647 million orders were delivered by the company representing a growth of 21 percent YoY. Furthermore, Gross Order Value( GOV) reached Rs. 263.1 billion during the same timeframe, which was driven by a 21 percent YoY growth in order volumes and a 2 percent YoY growth in average order value (AOV).
Headquartered in New Delhi, Zomato Ltd was incorporated in 2010. The company is one of the leading online Food Service platforms in terms of the value of food sold. Its offerings include food delivery, Loyalty programs, dining-out services and others.
Written By Vaibhav Patil
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