News excerpt:

Zomato contested the Directorate General of GST Intelligence's Rs 401.70 crore tax notice on delivery charges.

GST notice to Zomato

•  Zomato received a show cause notice from the Directorate General of GST Intelligence (DGGI).
•  The GST notice notice, issued under Section 74(1) of the Central Goods and Services Tax Act, 2017, demanded an explanation from Zomato regarding an alleged tax liability amounting to Rs 401.70 crore.
• This includes interest and penalties for the duration spanning from October 29, 2019, to March 31, 2022.
• The show cause notice specifically targets the delivery charges collected by Zomato from customers on behalf of their delivery partners during the aforementioned period.

Zomato's Response:

• Zomato asserts it is not liable to pay tax on delivery charges.
•  It argues that the delivery charges are collected for delivery partners who provide services directly to customers.

Recent issue of Swiggy

• Previously, online food aggregator Swiggy also received a similar GST notice for tax of about Rs 350 crore.
• The issue is being debated by industry and experts as well who point out that the GST liability will depend on the contract between the food platform and the delivery agent and who between the two actually undertakes the delivery.