Zomato Shares Witness 5% Decline Following Rs 402-Crore GST Notice

Zomato Shares Witness 5% Decline

Zomato Shares Witness 5% Decline – Zomato, the renowned food delivery platform, faced a setback as its shares recorded a 5% decline, settling at Rs 120.7 on the Bombay Stock Exchange (BSE). This decline can be attributed to the recent issuance of a show-cause notice by the Goods and Services Tax (GST) authorities, indicating outstanding dues.

Decoding the GST Notice

On December 26, the GST authorities, acting under Section 74(1) of the Central Goods and Services Tax Act, 2017, issued a notice through the Directorate General of GST Intelligence, Pune Zonal Unit. The notice directs Zomato to provide a detailed response, explaining why the alleged tax liability of Rs 401.7 crore, along with associated interest and penalties covering October 29, 2019, to March 31, 2022, should not be imposed.

Zomato’s Response

Zomato swiftly responded to the allegations in an official filing. The company contested the claims, asserting that the amount mentioned in the show-cause notice was based on the delivery charges collected from customers on behalf of delivery partners during the specified period. Zomato strongly maintains its position that no tax liability exists since the delivery charges are collected by the company on behalf of the delivery partners.

Contractual Terms and Conditions

Emphasizing the agreed-upon contractual terms, Zomato clarified that the delivery partners render services to the customers, not to the company directly. The company is preparing a comprehensive response to submit in defense against the show-cause notice.

Stock Market Response

As of 3:52 PM, Zomato’s stock was trading 3.03% lower at Rs 123.20 on the NSE. Despite this recent setback, the company has yielded remarkable returns of over 105% to investors on a year-to-date basis.

Confidence Amidst Challenges

In the official filing, Zomato further clarified that, as of now, no official order has been issued. The company remains steadfast in its belief in the strength of its case, expressing confidence in a positive resolution despite the current challenges.

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