Food and grocery delivery major Zomato has received a tax demand notice of Rs 803.4 crore from the Goods and Services Tax (GST) authorities, as per reports.

This comprises a tax demand of Rs 401.7 crore as well as a comparable amount for penalties and interest.

The claim relates to tax obligations that have not been fulfilled between October 29, 2019, and March 31, 2022.

"We believe that we have a strong case on merits backed by opinions from our external legal and tax advisors. The company will be filing an appeal against the order before the appropriate authority," Zomato says.

During the July–September quarter, Zomato recorded operational revenue of Rs 4,799 crore and a net profit of Rs 176 crore.

The matter concerns whether delivery fees received by aggregators like Zomato and Swiggy are subject to taxes. According to the sites, gig workers act as delivery partners and get paid according to the number of orders they fulfil.

Except in loyalty programs where the platforms waive the fees, users are charged for this delivery. The gig workers are charged this delivery cost.

Food delivery is a service subject to 18 percent tax under GST legislation, and the government believes that because the platforms have been collecting a service charge, they should be responsible for paying the tax.

In December of last year, Zomato received a show-cause notice from the GST authorities.

Based in Bengaluru the show-cause notice was also given to Swiggy, which went public last month, in December of last year. Swiggy claimed to have received a show-cause notice for a Rs 326.8 crore tax due in its IPO prospectus.