Online education firm under lens for alleged tax evasion

One of the promoters of an online educational portal has been arrested by central revenue authorities for allegedly evading service tax worth crores by declaring the company as a 'tour operator'.
Officials of Directorate General of Central Excise Intelligence (DGCEI) arrested Managing Director of Noida-based eBiz.Com Pvt Limited, Pawan Malhan, who was produced before a local court here yesterday and remanded in 14 days judicial custody, official sources said.
He was arrested after a case was registered against the firm for allegedly making wrongful claims for tax benefit by declaring the company as 'tour operator' instead of education service provider to pay less service tax, they said.

The alleged service tax evasion in the case is of more than Rs 15 crore, the sources said.
An email seeking comments from the firm did not elicit any response. An SMS sent to one of company's senior associates was also not responded to.
According to the rules, tour operators get a 90 per cent exemption from Service Tax and the company took benefit of the scheme by declaring itself as a tour operator and sold its online educational packages 'eBiz holiday accommodation packages', they alleged.

During investigation, the central excise officials claimed that eBiz.Com was engaged in providing only "online information and database access service and retrieval service through computer network" and they were not at all in tour operating business, the sources said.

The investigators claimed to have found that the company has shown more than 40 per cent of its business from holiday packages.
Also, the DGCEI is said to have found that the company has claimed income from tour operator service to the tune of more than Rs 40 crore during FY 2014-15, their expenditure towards hotel bookings during the same period was only Rs 3.62 lakh, they added.