Eternal Ltd, the parent company of Zomato and Blinkit, confirmed on Sunday that it has received a goods and services tax (GST) demand order totaling over Rs 128 crore from the Uttar Pradesh tax department. The order, issued by the Deputy Commissioner of State Tax in Lucknow, pertains to alleged short payment of output tax and excess availment of input tax credit during the period from April 2023 to March 2024. Eternal notified stock exchanges that the order includes a tax demand of Rs 64.17 crore, along with an equivalent amount in penalty and additional interest as determined by state authorities. The company said it believes it has a strong case on merit and intends to file an appeal against the assessment before the appropriate appellate authority.
Eternal, rebranded earlier this year from Zomato Ltd, stated that the notice relates specifically to the company’s operations under its food delivery and quick commerce portfolios in Uttar Pradesh. The company assured investors that the issue will not have any immediate material impact on its financial health and maintained that it has complied with all formal tax obligations.
Company Performance Remains Steady Amid Regulatory Headwinds:
The GST demand comes just days after Eternal reported a consolidated net profit of Rs 65 crore for the July–September quarter of FY26, despite an ongoing slowdown in discretionary consumption across India’s food delivery and online retail sectors. Although down from Rs 176 crore in the same period last fiscal, the company’s leadership attributed the profitability dip to softer consumer spending, volatile weather conditions, and a growing shift in consumer preferences toward instant commerce. The quick commerce division, led by Blinkit, continued to be a major growth driver with net order value (NOV) up 137 percent year-on-year to Rs 11,679 crore, while adjusted segment revenue grew 756 percent over the previous year to Rs 9,891 crore.
Eternal’s food delivery segment also showed moderate recovery after five quarters of decline, posting a 14 percent YoY growth rate in NOV. The company’s operating revenue surged to Rs 13,590 crore during the quarter, compared with Rs 4,799 crore a year earlier, while total expenses stood at Rs 13,813 crore.
GST Changes Affect Delivery Costs and Consumer Demand:
Eternal’s leadership highlighted the widening impact of recent GST rationalization measures on both food and quick commerce. As of September 22, lower GST rates on essential goods have reduced average taxes on Blinkit’s product basket by roughly 3 percentage points, which the company expects will help stimulate demand from Q3FY26 onward. However, the imposition of an 18 percent GST on delivery charges for Zomato orders has modestly affected volume growth, with a segment of consumers reportedly reducing low-value purchases. Eternal CFO Akshant Goyal said the company chose to pass the additional tax burden to customers, impacting nearly a quarter of non-free delivery orders, though Blinkit’s model remains unaffected since its charges already include the tax.
Goyal explained that Hyperpure, Eternal’s B2B supply business, reported a quarter-on-quarter revenue decline of 55 percent to Rs 1,023 crore as the firm continues its transition to an inventory ownership model in quick commerce. Despite short-term disruptions, Eternal maintained its guidance for strong store expansion, targeting 2,100 Blinkit outlets by December 2025 and 3,000 outlets by March 2027, as it aims to consolidate its position as India’s leading quick commerce network.
Strategic Focus on Simplification and Market Consolidation:
In a letter to shareholders, Eternal founder and CEO Deepinder Goyal reaffirmed the company’s focus on operational efficiency, innovation, and long-term profitability amid near-term challenges. Goyal noted that the firm is streamlining operations by aligning its food delivery, hyperlocal commerce, and logistics businesses into a unified digital ecosystem. He reiterated his confidence that the ongoing GST matter would be resolved lawfully without major financial disruption.
The company’s consolidated growth strategy continues to rest on consumer retention through service efficiency, technological investment, and brand expansion across urban metros. Eternal’s response to emerging low-cost competitors in the food delivery space, like Toing and Ownly, will also be closely monitored as it refines its pricing model and expands its membership benefits. Despite the latest GST headwinds, Eternal remains optimistic that its diversified portfolio and sharply scaling Blinkit operations position it well for sustained growth across India’s digital consumption economy.
