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MakeMyTrip---one of the leading online travel services company in India is facing probe on alleged service tax evasion of Rs 75 crore (US$10 million).

According to media reports, a case has been registered against the online portal by Directorate General of Central Excise Intelligence. This follows its failure in depositing the service tax collected from the customers. Subsequently, a senior executive was arrested by the DGCEI and was later released on bail.

A company spokesperson said the travel company will challenge the Service Tax before the 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),” reports Indian Express.

The spokesman claimed that the travel portal has a strong case and 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. There is 14. 5 percent service tax in which 0.5 percent is for the cess on Swachh Bharat. The DGCEI found that MakeMyTrip has been collecting two types of taxes. One was service tax on the hotel rates negotiated by it for renting rooms. Then service tax of 10 percent on the gross value of customer vouchers, as a tour operator. The second service tax is called MMT Tax (Make My Trip Tax). DGCEI found MakeMyTrip used to deposit only the MMT Tax but not the one collected for renting hotel rooms. MakeMyTrip reportedly collected Rs 83 crore in Service Tax between October 2010 and September 2015. Bulk of it was from the service tax levied on renting hotel rooms. According to a report by CNBC-TV 18, now the DGCEI has widened its service tax probe to add more travel portals like Goibibo and Yatra into the ambit. Its officers said many travel portals had been collecting service tax directly. They are also claiming service tax abatements claiming as tour operators, even though no such tours have been organized by them. According to the DGCEI, collecting tax then and not depositing the amount in government accounts is a serious offence.

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