Restaurant India News: Zomato Faces Rs 40.32 Crore GST Demand, Parent Firm Eternal Plans to Appeal

Online food delivery giant Zomato’s parent company, Eternal, has disclosed that it has been served three service tax demands and penalty orders amounting to Rs 40.32 crore. In its filing on Monday, the Gurgaon-based company confirmed that the order is linked to goods and services tax (GST) for the period between July 2017 and March 2020. Eternal stated it would challenge the order.

“The demand order has been received with respect to short payment of output tax and excess availment of input tax credit with interest and penalty thereon,” the company noted.

As per the filing, the breakdown includes Rs 17.19 crore in GST, Rs 21.42 crore in interest, and Rs 1.71 crore in penalty.

“We believe that we have a strong case on the merits, backed by view from lawyers, and do not expect any financial impact on the company,” Eternal added.

This is not the first instance of tax-related disputes for the company. In December 2024, Zomato received a tax demand notice of Rs 803.4 crore from GST authorities. Earlier in April 2023, the firm was served a service tax demand and penalty order worth Rs 11.82 crore. On April 2, 2023, Eternal also faced a service tax demand and penalty order aggregating to over Rs 184 crore for non-payment of service tax from October 2014 to June 2017.

Despite these challenges, Zomato reported operating revenue of Rs 7,167 crore for the June quarter, a sharp rise compared to Rs 4,206 crore a year earlier. However, net profit fell to Rs 25 crore from Rs 253 crore in the same period last year.

The frequent tax notices highlight the regulatory scrutiny faced by India’s quick-commerce and food delivery sector. Hospitality and food-tech businesses remain particularly exposed to compliance risks, given the complexity of tax structures and rapid scaling of operations.