Proxy firm InGovern asks SEBI to examine Meesho's GST disclosures

Proxy advisory firm InGovern Research Services has formally asked India's securities regulator, SEBI, to investigate the Goods and Services Tax (GST) practices of e-commerce company Meesho, specifically concerning its logistics arm, Valmo Transportation. InGovern alleges that Valmo may be misclassifying freight charges recovered from customers as goods transport agency (GTA) services to benefit from a lower tax rate.

The firm claims that invoices reviewed by InGovern suggest that certain charges attracting a 5% integrated GST (IGST) should, according to their analysis, have been subject to an 18% GST rate. InGovern argues this tax treatment is crucial to Meesho's business model, enabling it to subsidize shipping costs, offer competitive pricing, and maintain its market positioning.

A Meesho spokesperson has refuted the allegations, stating that the claims are unsubstantiated and do not reflect any findings by SEBI or tax authorities. The company asserts its confidence in its tax positions, which are compliant with legal frameworks, and its adherence to disclosure obligations. Meesho also stated it has not received any communication from SEBI on the matter.

InGovern has urged SEBI to assess whether Meesho has adequately disclosed the legal sustainability of its tax stance and potential contingent liabilities. The advisory firm warns that an adverse ruling by tax authorities could result in significant back taxes, interest, and penalties, potentially impacting Meesho's profitability and valuation.