SUMMARY
MakeMyTrip executive MK Pallai was arrested in 2016
I-T officials acted with undue haste, the Delhi HC had said
Tax authorities also failed to provide a ‘show-cause’ notice for the arrest
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Three years after tax authorities arrested a MakeMyTrip executive over alleged arrears on taxes, the Supreme Court on January 24 has taken cognizance of the stay issued by the Delhi High Court on the arrest.
A MakeMyTrip spokesperson told Inc42 that MakeMyTrip is yet to receive the Supreme Court order and examine the what has to be done about the money that the company has already paid.
In September 2016, the Delhi High Court had said that the arrest of MakeMyTrip vice president (finance) MK Pallai on January 8, 2016, was contrary to the law and violated his constitutional rights as the Directorate General of Central Excise and Intelligence (DGCEI) had failed to provide the required ‘show-cause’ notice. Pillai was later granted bail by a court.
The court had also asked directorate to refund the service tax collected from travel portals Ibibo, MakeMyTrip and eBiz within four weeks. It had said that the DGCEI had acted with “undue haste and in a reckless manner.” The government agency then took the matter to the Supreme Court seeking a stay on the High Court order.
However a Supreme Court bench comprising Justices A.K. Sikri and S. Abdul Nazir dismissed the appeal filed by the revenue authorities.
The bench also threatened to slap fines on the department for not following the procedure and going overboard in its zeal to collect taxes, but later relented after senior advocate K. Radhakrishnan said it was the “unkindest cut” after the court had dismissed his appeal.
The bench emphasised that the department cannot arrest without following the law. It also said that there could have been many reasons why the company had failed to pay, and the revenue authorities first have to show cause and seek an explanation.
Appearing for the MakeMyTrip, senior advocate V. Shridharan said that this was an example of “tax terrorism” of sorts. He said that the company had since paid the entire tax amount to the authorities.
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