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Service tax: Finance ministry may challenge Delhi HC verdict
September, 07th 2016

A recent Delhi high court verdict directing the central revenue authorities to refund service tax collected from three travel portals including MakeMyTrip may be challenged in the Supreme Court by the government.
People familiar with the matter on Sunday said legal experts are going through the high court order and an appeal challenging the verdict is likely to be filed in the Supreme Court.

The Delhi high court on Thursday ordered the Directorate General of Central Excise Intelligence (DGCEI)—an intelligence arm under the finance ministry—to refund the service tax collected from travel portals MakeMyTrip, Ibibo and Ebiz, saying the payment made by them “was not voluntary but under coercion and duress”.

Also Read: HC upholds illegality of arrest of officials of MakeMyTrip, Ibibo over alleged service tax evasion

The court had also pulled up the DGCEI for “unwarranted” arrest of a senior official each from MakeMyTrip and Ebiz, saying the action by the department was taken without following the procedure laid down under the law.

The order came on the pleas of these companies challenging the action taken against them by the DGCEI which had accused them of evading service tax to the tune of several crore rupees.

The people claimed that the DGCEI detected alleged service tax evasion by these firms and there was sufficient ground for it to arrest their executives.

“The service tax probe against these companies are still going on. We will also issue show cause notices in due course of time,” a person with direct knowledge of the matter said.

The DGCEI alleged that the firms were not depositing service tax being collected from their customers. All three firms have denied any wrongdoing. Service tax is charged at the rate of 14.5%, including 0.5% Swachh Bharat cess.

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