Delhi HC seeks govt's reply on MakeMyTrip's petition

Court reprimands service tax dept for arresting portal executive

Delhi High Court has sought replies in three weeks from union finance ministry and service tax department on online portal MakeMyTrip's writ petition challenging charges of tax evasion.

The portal moved the court following the arrest of one of its executives by the tax department earlier this month.

However, the department's action did not go down well with the court which reprimanded it for the arresting the executive before completing investigation and directed it not to take coercive steps.

The service tax department contends that MakeMyTrip owes the government Rs 67 crore in taxes it collected from sale of hotel rooms. The portal has disputed the department's demand but has so far deposited Rs 40 crore in tax

While portals pay service tax as an intermediary or an agent for facilitating airline ticketing and hotel bookings, the service tax department feels the portals have liability to pay taxes as hotels.

" No show cause notice has been issued to MakeMyTrip. In the absence of a complete investigation the service tax department can not compel it to pay tax," said V Lakshmikumaran, counsel for MakeMyTrip.