Meesho, a value commerce platform, is currently disputing a tax demand of Rs 14.29 crore issued by the Goods and Services Tax Appellate Tribunal (GSTAT). The demand arises from allegations that the company failed to collect tax at source (TCS) on specific seller transactions between October 2018 and March 2020.
The company has stated that it considers the demand to be "unsustainable and without merit," as indicated in its recent filing with stock exchanges.
Details of the Demand
The GSTAT's order claims that Meesho did not collect the applicable TCS on transactions conducted outside its platform during the specified period. These transactions are part of Meesho's reseller model, where individual resellers share products from the platform with their customers via social media.
Regulatory Findings
The Commissioner (Appeals), CGST – Thane Commissionerate in Mumbai, has upheld the demand under section 74 of the CGST Act. However, a separate penalty imposed under section 122 was set aside.
Company's Position
In its filing, Meesho expressed confidence in its position, citing a detailed assessment and independent professional advice to support its claim that the tax demand is unjustified.
Recent Financial Context
This dispute follows a recent demand from the income tax department for nearly Rs 1,500 crore, alleging under-reporting of income for the financial year 2022-23. Meesho reported a significant increase in net losses for the October–December quarter, amounting to Rs 491 crore, despite a 31% rise in operating revenue to Rs 3,517 crore.
Conclusion
The outcome of this tax dispute could have implications for Meesho's financial standing and operational model. Stakeholders will be watching closely as the company navigates this challenge.
