Probe against MakeMyTrip for alleged tax evasion of Rs 75 crore

The firm has so far deposited Rs 15 crore towards its anticipated service tax liability.

By: PTI | New Delhi | Updated: January 17, 2016 12:32 pm
MMT lead Service tax is charged at the rate of 14.5 per cent (including 0.5 per cent of Swachh Bharat Cess).

Online travel company MakeMyTrip is under probe for alleged service tax evasion of Rs 75 crore.

The Directorate General of Central Excise Intelligence (DGCEI) has registered a case against the online travel services provider for allegedly not depositing service tax which it had collected from the customers, official sources said.

Following the probe, one of the company’s senior executives was arrested by the DGCEI officials and released on bail last week, they said.

When reached for comments, a company spokesperson said the service tax case is an industry issue and it will be contesting the case with appropriate authorities.

“At MakeMyTrip, we strongly believe in an ethical, transparent and compliant corporate culture and abide by all laws and regulations of the country. The service tax case in question is potentially an industry issue that can impact all Online Travel Agents (OTAs).

“We have a strong case as advised by our tax advisors and therefore will be contesting the matter with the appropriate authorities. We are extending our full cooperation to the authorities in the investigation. Further, the company official who was detained by the authorities has already been released,” the spokesperson said.

Service tax is charged at the rate of 14.5 per cent (including 0.5 per cent of Swachh Bharat Cess).

The DGCEI investigation has found that the company was collecting two types of taxes–service tax on 60 per cent of the rate negotiated by MakeMyTrip with the hotels towards renting of rooms and service tax on 10 per cent of the gross value on the customer vouchers by treating themselves as tour operators. The second category of service tax was being mentioned as MMT (Make My Trip) Tax by the firm, the sources said.

It is also found by the DGCEI that MakeMyTrip was depositing so called MMT Tax and not the the one collected from the customers towards renting of hotel rooms, they said.

MakeMyTrip has collected Service Tax to the tune of Rs 83 crore (approximately) from October 2010 to September 2015 from customers for taxable service of renting of hotel rooms out of which Rs 67 crore has not been deposited in the government account, the sources said.

The estimated alleged evasion of service tax by MakeMyTrip is about Rs 75 crore. The firm has so far deposited Rs 15 crore towards its anticipated service tax liability and has promised to deposit Rs 10 crore during the hearing of the bail application of its executive, sources said.

Meanwhile, the DGCEI has conducted a detailed background check of some of the 30,000 hotels which have agreements with MakeMyTrip. So far the verification conducted in respect of 490 hotels has found that 212 of them are not even registered with the service tax authorities, they said.

“Necessary action will also be taken against these hotels by concerned service tax authorities,” they said.

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First Published on: January 17, 2016 12:31 pm
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    Atul
    Jan 17, 2016 at 10:04 am
    Make My Trip is like any other Indian company. It has to make profit in the given business environment. It though has an opportunity to do the business on the cleaner way. It does not show any inclination to do so however.
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      anil sekhri
      Jan 18, 2016 at 6:36 am
      My experience with service tax dept is that they make very extraneous claims and always take extreme views. I dont believe this high profile co would do tax evasion of this type as alleged.
      Reply
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        Annu
        Jan 17, 2016 at 7:26 pm
        In travel industry.. Some companies have not shown even total numbers of employees.. ries are being paid cash.. DGCEI can easily trap those Post box companies in India itself.. Need more scrutiny
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          Anon
          Jan 28, 2016 at 10:33 am
          the letter MMT is sending all the hotels and is making they sign and seal it ... Dear Sir This has reference to the ongoing relationship between us and MakeMyTrip wherein you have been acting as our agent to facilitate the booking of our hotel rooms. We hereby certify that MMT has been remitting to us all the hotel charges in relation to the guests bookings made by them. The said charges include taxes charged by us (including taxes like luxury tax, Service Tax etc. if any and as applicable) received from Customers for the bookings (including the Hotel / Rooms Bookings) on our behalf since the beginning of our above mentioned business relationship. We correspondingly, on receipt of the above said taxes, have been timely depositing the same to the concerned Government Department as per the applicable rules. We are registered with the service tax department and our registration number is ……………… Yours truly
          Reply
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            Arun Kumar
            Jan 18, 2016 at 7:10 am
            How come this kind of incidents happens in our country. This is not first time an organization has done this kind of thing. Govt must have strong monitoring system.
            Reply
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              Arun Kumar
              Jan 18, 2016 at 7:11 am
              Tax evasion is not a new discovery thing...... From :
              Reply
              1. A
                Arun Kumar
                Jan 18, 2016 at 7:11 am
                Reply
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                  Rohit Bhargava
                  Jan 27, 2016 at 8:45 am
                  They give you Cashback in form of MMT Cash, which can only be used in part and that too under loads of guidelines and stition. But, when you cancel the ticket, they reduce the actual amount of refund by taking ACTUAL cash. There..Discrepancy there too.
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                    VIVEK
                    Jan 17, 2016 at 8:24 am
                    FROM THE ARTICLE: "So far the verification conducted in respect of 490 hotels has found that 212 of them are not even registered with the service tax authorities, they said." That the reality of Indian state. They collect tax from customer and then pocket it, though still an allegation. A renowned firm like Make My Trip which has been promoted by likes of Ranbir Kapoor and Deepika in Jawani Deewani. The govt. should start fine combing these firms and their tax revenue will jump by 30%/40% with the same rate of tax rate .
                    Reply
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