Finance Ministry to challenge High Court's verdict on online travel portals

NEW DELHI: A recent High Court verdict directing the central revenue authorities to refund service tax collected from three travel portals including MakeMyTrip may be challenged in Supreme Court by the government.

Officials sources today said legal experts are going through the High Court order and an appeal challenging the verdict is likely to be filed in Supreme Court.

Delhi High Court had on Thursday ordered 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".

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 sources 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 source said.

The DGCEI has 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 per cent (including 0.5 per cent of Swachh Bharat Cess).