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

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

The company has 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 a regulatory 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, in view of 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.

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