Eternal Ltd., the company behind household names Zomato and Blinkit, has been served with tax demand orders worth over ₹40 crore by the GST department. The notices, which cover a period stretching from July 2017 to March 2020, have been issued by the Joint Commissioner (Appeals-4) in Bengaluru.
According to the company’s regulatory filing on Monday night, the demand includes ₹17.19 crore in GST dues, a hefty ₹21.42 crore in interest, and an additional ₹1.71 crore in penalty. This marks one of the most significant tax-related challenges for Eternal in recent years.
Credits: NDTV Profit
The Businesses at Stake
Eternal Ltd. is not just about Zomato and Blinkit. The company also operates Hyperpure, its farm-to-fork supplies vertical catering to restaurants, and District, its B2B logistics and services arm. Together, these four businesses form the backbone of Eternal’s ecosystem, which powers food delivery, quick-commerce, supply-chain efficiencies, and allied services.
The tax demands cast a temporary shadow over the company’s otherwise aggressive growth story. Zomato, for instance, has been inching closer to profitability in its food delivery business, while Blinkit has rapidly expanded its dark store network to dominate the quick-commerce sector.
Eternal’s Response: Standing Its Ground
While the numbers sound intimidating, Eternal Ltd. has made it clear that it does not intend to quietly accept the orders. In its statement, the company said:
“We believe that we have a strong case on merits, backed by view from lawyers, and the company will be filing appeals against the orders before the appropriate authority.”
By indicating that its legal advisors see merit in contesting the demand, Eternal is signaling confidence in its compliance track record. The appeals process, however, could stretch over several months or even years, depending on how the litigation plays out.
Why the Period Matters: GST’s Early Years
The period under dispute — July 2017 to March 2020 — is particularly important. These were the initial years after the Goods and Services Tax (GST) regime was rolled out in India. Several companies across industries have faced disputes with tax authorities during this time due to the evolving nature of rules, compliance interpretations, and frequent amendments.
Tax experts often note that many such disputes arise not necessarily from deliberate evasion but from differences in interpretation of the law. Eternal’s insistence that it has a “strong case” suggests that it sees the orders as stemming from such interpretational issues rather than willful non-compliance.
Impact on Eternal’s Market Position
For investors and market watchers, the key question is whether this development could impact Eternal’s financials or stock performance in the short term. While ₹40 crore is not insignificant, it is relatively small compared to Eternal’s overall scale and the market capitalization of Zomato, its flagship brand.
Zomato recently reported strong revenue growth in food delivery and Blinkit, which it acquired in 2022, has been showing rapid topline expansion. The company has also been praised for tightening its unit economics and driving towards long-term profitability.
Given this backdrop, analysts may view the tax demand as a temporary headwind rather than a major financial setback.
The Road Ahead: Appeals and Uncertainty
Eternal Ltd.’s next steps will revolve around filing appeals before higher authorities, a process that could see the tax demands being either upheld, reduced, or even fully quashed. Until then, the liability technically remains, though it may not immediately impact the company’s cash flows if a stay is granted.
This case also highlights the broader issue of tax disputes in India’s startup ecosystem. As unicorns and listed tech firms continue to scale, regulatory scrutiny on their financials and tax compliance is only expected to intensify.
Conclusion: A Test of Resilience
The GST orders are a test of Eternal Ltd.’s fortitude as well as a financial obstacle. After navigating regulatory changes, competitive conflicts, and the pandemic’s interruption of food services, the company is no stranger to difficulties.
Eternal appears ready to take on the matter head-on because to its robust legal position and varied commercial portfolio. Whether or whether the appeals are successful, this event highlights the need for India’s modern businesses to strike a balance between quick expansion and the regulators’ constant scrutiny.
