Zomato, the online food delivery platform, is facing a show cause notice (SCN) from the Goods and Services Tax (GST) office amounting to ?401.7 crore ($4.8 billion) for allegedly not paying taxes on delivery fee collections from customers between October 29, 2019, and March 31, 2022. Following this development, Zomato’s shares experienced a downturn, opening 1.69% lower on BSE at ?124.90 and 1.77% lower on NSE at ?124.80. In response, Zomato clarified in a regulatory filing that the sum in question is derived from delivery charges collected from customers on behalf of delivery partners during the specified period. This adds to the challenges faced by Zomato as it deals with regulatory scrutiny and financial obligations. The SCN comes at a time when Zomato’s share prices are showing signs of recovery after a period of volatility.
In a parallel development, Zomato’s Live Entertainment vertical is set to expand its presence by entering new cities and creating fresh intellectual properties (IPs). This move aligns with Zomato’s recent introduction of a dedicated tab on its app, facilitating users in discovering and engaging with anticipated events across cities. Zomato Live Entertainment, launched in 2018, started with the Zomaland IP, a food carnival and music festival spanning eight cities. Zeenah Vilcassim, CEO of Zomato Live, mentioned that the company aims for a substantial double-digit contribution to Zomato’s topline within three years. Despite Zomato Live’s current contribution being a single-digit percentage to Zomato’s overall revenue, achieving a low double-digit contribution would be substantial, given the scale and size of the business in online ordering.
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