Delhivery, the Gurugram-based logistics giant, has been issued a tax demand of Rs 5.35 crore by the West Bengal Directorate of Commercial Taxes. The order was passed on February 26, 2025, under Section 73 of the West Bengal Goods and Services Tax (GST) Act, 2017, and Section 20 of the Integrated Goods and Services Tax (IGST) Act, 2017. The demand comes with an additional penalty of Rs 53.57 lakh and an interest charge on the outstanding amount.
The dispute arises due to the disallowance of the company’s Input Tax Credit (ITC) for the 2020-21 fiscal year, resulting from alleged discrepancies in ITC reversals, claims from dealers whose GSTINs were canceled retrospectively, and claims from dealers who did not file their GSTR-3B returns. Delhivery plans to appeal the order, stating that the development will not have any material impact on its financials or operations.
This development follows a similar tax notice received by logistics firm BlackBuck earlier this week, amounting to Rs 14.2 crore. Additionally, EaseMyTrip, a Traveltech firm, was also issued a penalty notice by Delhi authorities for alleged GST violations.
1. Introduction to Delhivery
1.1 Company Overview:
Delhivery, founded in 2011 by Sahil Barua, Mohit Tandon, and Kapil Bharati, is one of India’s most successful logistics and supply chain companies. The company offers a comprehensive range of services, including parcel delivery, warehousing, and freight services, using technology to optimize logistics for e-commerce and other industries.
1.2 Working Model and Services Offered:
Delhivery operates across India and international markets, focusing on logistics and supply chain management. The company’s business model is based on providing end-to-end solutions for businesses, from warehousing and fulfillment to last-mile delivery and reverse logistics. Delhivery’s technology-driven platform helps streamline operations by offering real-time tracking, route optimization, and automated parcel sorting.
1.3 Revenue Model:
Delhivery generates revenue through a combination of service fees, commission-based earnings, and customized logistics solutions for different industries. The company offers solutions to e-commerce giants, retailers, and enterprises in various sectors like electronics, fashion, and FMCG. Delhivery’s revenue primarily comes from parcel delivery services, warehousing, and freight transportation.
1.4 Founders’ Background:
- Sahil Barua: Sahil Barua is the CEO and one of the co-founders of Delhivery. Before founding Delhivery, Barua worked at McKinsey & Company as an associate.
- Mohit Tandon: Mohit Tandon, another co-founder, brings experience in operations and supply chain management. He previously worked at companies like Trident Group and at consulting firms.
- Kapil Bharati: Kapil Bharati, the third co-founder, has expertise in operations and logistics, having worked in various roles in tech and supply chain management before Delhivery’s inception.
1.5 Services and Products:
Delhivery offers a wide range of services, including express parcel delivery, freight, warehousing, and supply chain management. The company also provides reverse logistics, which includes handling returns and exchanges. Furthermore, Delhivery has expanded into technology solutions for supply chain management, helping businesses optimize their operations through its tech-enabled platform.
2. The Tax Demand from West Bengal
2.1 Overview of the Tax Demand:
On February 26, 2025, Delhivery was handed a tax demand by the Directorate of Commercial Taxes, West Bengal, amounting to Rs 5.35 crore. This demand is related to the disallowance of Input Tax Credit (ITC) for the fiscal year 2020-21, which resulted in the company owing a significant sum under the Goods and Services Tax (GST) law.
2.2 Reasons Behind the Tax Demand:
According to the regulatory filing submitted by Delhivery, the tax demand arises due to discrepancies in the company’s ITC claims. The tax authorities pointed out several issues, including:
- Alleged short reversals of ITC under Rule 42/43.
- Claims made by dealers whose GSTINs were canceled with retrospective effect.
- Claims made by dealers who failed to file their GSTR-3B returns.
2.3 Penalty and Interest Charges:
In addition to the tax demand, the West Bengal authorities have imposed a penalty of Rs 53.57 lakh. Moreover, interest has been charged on the outstanding amount, which adds to the financial burden on the company.
2.4 Company’s Response:
Delhivery has made it clear that it plans to challenge this tax demand and file an appeal with the appellate authority. The company has also assured investors and stakeholders that this development will not impact its operations or financial stability in the long term.
3. Industry Context and Recent Developments
3.1 Similar Tax Notices in the Logistics Sector:
Delhivery is not alone in facing tax-related challenges. Earlier this week, BlackBuck, a logistics platform focusing on trucking, received two tax notices totaling Rs 14.2 crore. These notices came from the Assistant Commissioner of Commercial Taxes (Audit) in Bengaluru and the Office of the Deputy Commissioner of Income Tax (TDS).
Additionally, EaseMyTrip, a prominent travel technology company, was also slapped with a penalty of Rs 17.35 lakh by the Sales Tax Officer in Delhi for alleged GST violations.
3.2 GST Challenges in India’s Startup Ecosystem:
The startup ecosystem in India has witnessed increasing scrutiny from tax authorities, especially concerning GST compliance. Companies in industries such as logistics, e-commerce, and travel tech have faced challenges related to ITC claims, GST returns, and other tax issues. As the Indian government tightens the GST framework, more startups could face similar tax-related challenges in the coming years.
3.3 Delhivery’s Position in the Market:
Despite this setback, Delhivery continues to be a dominant player in India’s logistics industry. With over 450 million Android devices connected to its platform and more than 300 million active users globally, the company has proven itself as a technology-driven logistics powerhouse. As India’s e-commerce and logistics sector continues to grow, Delhivery’s ability to navigate these challenges will be crucial to its long-term success.
4. Learning for Startups and Entrepreneurs
4.1 Understanding Tax Compliance in India:
For startups operating in India, it’s crucial to understand and adhere to the Goods and Services Tax (GST) laws. Discrepancies in Input Tax Credit (ITC) claims and delayed or incorrect GST filings can lead to hefty fines and penalties. Entrepreneurs should invest in proper accounting and tax advisory services to avoid such issues.
4.2 Importance of Proper Documentation:
Startups must ensure that their financial and GST-related documentation is up-to-date and accurate. Regular audits and checks can help prevent issues like those faced by Delhivery and other firms in the logistics and tech sectors.
4.3 Navigating Tax Disputes:
When faced with a tax dispute, startups should promptly seek legal and financial advice. Filing an appeal with the appropriate authorities is a vital step in mitigating the impact of any tax demand. Timely resolution of such issues ensures that business operations are not severely affected.
5. Conclusion
Delhivery’s recent tax demand of Rs 5.35 crore from West Bengal is a significant development that brings attention to the challenges startups face in navigating India’s complex tax laws. While the company plans to appeal the decision, the incident highlights the importance of tax compliance and accurate financial record-keeping for all startups. The logistics giant’s ability to overcome this challenge will shape its future in an increasingly competitive market.
For Delhivery, the current tax dispute will likely be just a temporary setback in its journey toward becoming the largest consumer tech platform by 2028. However, it serves as a reminder to other startups about the need for proactive tax management and robust financial practices.
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