SC allows show cause notice against MakeMyTrip

Delhi HC had ruled that arrest of an executive without notice was illegal

The Supreme Court on Tuesday allowed the Directorate General of Central Excise and Intelligence (DGCEI) to issues a show cause notice against online travel portal MakeMyTrip within four weeks.

Earlier this month, Delhi High Court had ruled that the arrest of an executive of a travel portal, without issuing a show cause notice, was illegal. The court had also asked the department concerned to prosecute its own officer for the arrest.

In turn, the government had challenged the ruling in the Supreme Court.

The government has filed a service tax evasion case against MakeMyTrip. Its vice-president (finance), M K Pallai, was arrested and the government had demanded an initial deposit for tax arrears, reportedly amounting to about Rs 70 crore.

According to DGCEI, the portal had collected service tax to the tune of Rs 82.78 crore from hotels and other service providers till September 2015, but deposited only Rs 15.34 crore.

However, during the investigation, MakeMyTrip deposited Rs 70 crore.

During arguments in court on Tuesday, Attorney General Mukul Rohtagi, who appeared on behalf of DGCEI, raised questions on issuing a notice before arresting the accused.

For the defence, former finance minister, P Chidambaram, said a full stay on the high court order should not be granted and asked the department to refund Rs 67.44 crore.

He said MakeMyTrip had deposited the amount under coercion and threat of arrest, and it was tax terrorism.

The court will hear the case next on 9 November.