A tax demand and penalty order totalling INR 1.34 Cr for the fiscal year 2021–2022 has been issued to Eternal, a food delivery and rapid commerce company.
Tax Order Issued by Lucknow Authorities
According to a stock exchange filing by the firm, which owns Zomato and Blinkit, the order was issued on 6 August by the Deputy Commissioner of State Tax in Lucknow, Uttar Pradesh, in accordance with Section 74 of the CGST and UPGST Acts. In addition to relevant interest, the total sum consists of INR 67.25 lakh in tax demand and an equal amount in penalty.
Company Plans to Appeal GST Ruling
The overuse of input tax credits and the underpayment of output taxes were the reasons for the increase in demand. In a filing, Eternal said that it thinks the company has a compelling argument on its own merits and that it will appeal the ruling to the relevant authority.
GST Troubles Are Not New for Eternal
Companies like Eternal frequently receive GST notices for non-payment of taxes; in fact, several state government offices have sent out these notices. For example, in December of last year, the CGST and Central Excise of Thane Commissionerate sent Eternal a GST demand notice and a penalty demand of INR 803 Cr.
Before that, the company had received GST notices from the governments of West Bengal, Tamil Nadu, Karnataka, and Haryana within the previous 12 months.
Financial Performance: Profit Drop Despite Revenue Surge
In terms of finances, the company’s first-quarter net profit for FY26 dropped 90% to INR 25 Cr from INR 253 during the same period last year. From INR 4,206 Cr in Q1 FY25 to INR 7,167 Cr, Eternal’s operating revenue increased by more than 70%.
The penalty coincides with reports that Antfin, an Alibaba Group unit, will sell 18.8 Cr shares of Eternal in a block deal valued at around INR 5,375 Cr. At the conclusion of the June quarter, Antfin owned 1.95% of Eternal, according to the company’s shareholding that was listed on exchanges.
NRAI Demands Clarity on Zomato’s Long-Distance Fee
The National Restaurant Association of India (NRAI) has chosen to speak with Zomato this month after a flurry of restaurant complaints regarding the food tech giant’s recently implemented long-distance service charge.
According to various media reports, the restaurant industry association had preliminary talks with Deepinder Goyal, the CEO of Zomato parent company Eternal, about the matter and intends to meet with him this month to try to find a solution.
Zomato announced in May of this year that, regardless of order value, it would charge restaurants a service fee of INR 15 for deliveries within 4 to 6 km and INR 25 to INR 35 for deliveries over 6 km.
Restaurants are furious about this action. Zomato asserts that it sets a 30% commission cap on restaurant orders, but eateries complain that this cap has been violated as a result of the new long-distance price.
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