Shares of restaurant aggregator and Blinkit operator Zomato Ltd. will be buzzing in trade on December 13.

The food delivery giant has received an order from the Joint Commissioner of CGST & Central Excise, Thane Commissionerate, Maharashtra, demanding GST of Rs 401.7 crore with interest as applicable, and a penalty of Rs 401.7 crore, for the period from October 29, 2019, to March 31, 2022. The demand order totals Rs 803.4 crore.

"The demand order has been received in respect of non-payment of GST on delivery charges with interest and penalty thereon," said the firm in a filing with the exchanges.

Zomato is confident of its position and will fight the case. “We believe that we have a strong case on merits, supported by opinions from our external legal and tax advisors. We will be filing an appeal against this order before the appropriate authority," said Zomato.

Replicating Zomato’s cost-advantage model is challenging for competitors, especially given its market share and higher advertisement revenues, said Ambit Asset Managers in its monthly newsletter to its shareholders while retaining Zomato as its core holding in its portfolios in December.

It stated that while many competitors resort to cash-burning strategies and heavy discounting, these approaches are unsustainable, and Zomato’s model, with its cost advantages and market leadership, makes imitation difficult for other players.

In November, the company raised Rs 8,500 crore through a Qualified Institutional Placement (QIP), allocating 33.65 crore equity shares at Rs 252.62 per share. A significant portion of the proceeds -- Rs 2,137 crore -- will be directed towards expanding the operations of Zomato’s quick commerce unit Blinkit, particularly through investments in dark stores.

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