Zomato’s Parent Faces ₹64.17 Crore Tax Notice from UP Government Over GST Discrepancies

Eternal Hit with State Tax Demand Over GST Irregularities

In a regulatory filing dated October 19, 2025, Eternal, the parent firm behind Zomato and Blinkit, disclosed that it has received a tax demand order from the Deputy Commissioner of State Tax, Lucknow. The notice, amounting to ₹64.17 crore, includes interest and penalties related to alleged discrepancies in GST filings.

Key highlights from the development:

- Nature of the Demand  
  The ₹64.17 crore order pertains to short payment of output tax and excess availment of input tax credit (ITC) for the financial year April 2023 to March 2024.

- Issuing Authority  
  The demand was issued by the Deputy Commissioner, State Tax, Lucknow, Uttar Pradesh, and was received by Eternal on October 18, 2025.

- Company Response  
  Eternal stated in its exchange filing that it believes it has a strong case and intends to file an appeal before the appropriate authority. The company emphasized that it does not expect any material impact on its financials or operations.

- Broader GST Scrutiny  
  The notice is part of a larger trend of increased scrutiny by state tax departments on digital platforms and e-commerce firms, especially regarding ITC claims and tax compliance.

- Parallel GST Demand  
  Eternal also faces a separate GST demand totaling ₹128 crore, which includes the ₹64.17 crore component, interest, and penalties. This broader figure was reported by multiple financial outlets.

- Business Performance  
  Despite the tax headwinds, Eternal reported a 2.8x year-on-year revenue growth in Q2 FY26, reaching ₹13,590 crore. However, net profit declined 63% to ₹65 crore, reflecting margin pressures.

- Market Reaction  
  Shares of Eternal dipped slightly following the announcement but remain up over 170% since listing in 2021, indicating investor confidence in its long-term growth trajectory.

As Eternal prepares to contest the tax order, the case underscores the growing regulatory vigilance in India’s digital economy and the importance of robust compliance frameworks.

Sources: MSN, Moneycontrol, Business Standard, Livemint, NewsBytes, Angel One