Vibhu Bakhru JUDGMENT
Dr. S. Muralidhar, J.
Introduction
1. These writ petitions by two entities operating on-line platforms/web portals raise important questions involving the powers of the Directorate General of Central Excise Intelligence (DGCEI) of arrest, investigation and assessment of service tax under the provisions of the Finance Act, 1994 ('FA').
2. Writ Petition (Civil) No. 525 of 2016 is by MakeMyTrip (India) Private Limited ('MMT') against Union of India ('UOI') through the Secretary, Ministry of Finance, [Respondent No. 1], the Director, DGCEI, [Respondent No. 2], The Additional Director General ('ADG'), DGCEI [Respondent No. 3] and The Senior Intelligence Officer, DGCEI [Respondent No. 4] seeking to restrain Respondent Nos. 2, 3 and 4 from taking any coercive action including threat of arrest against MMT and its officials for recovery of alleged service tax dues in terms of Section 73/73A of the FA. MMT also seeks a declaration that Respondent Nos. 2, 3 and 4 do not have the power to arrest the officials of MMT under Section 91 read with Section 89 of the FA and Section 9AA of the Central Excise Act, 1944 ('CE Act').
3. Writ Petition (Civil) No. 1283 of 2016 is filed by IBIBO Group Private Limited ('IBIBO') against the UOI through the Secretary, Ministry of Finance [Respondent No. 1], the Director and the Senior Intelligence Officer, DGCEI [Respondent Nos. 2 and 3 respectively]. The prayer in this writ petition by IBIBO is identical to the prayers in Writ Petition (Civil) No. 525 of 2016 filed by MMT.
4. In both writ petitions, applications were filed for interim directions to restrain the DGCEI from taking any coercive steps against the entities and their officers.
Common issues
5. A common issue that arises in both writ petitions is about the nature of service rendered by the Petitioners, MMT and IBIBO. The case of MMT and IBIBO is that they host web portals that facilitate the booking of rooms in hotels throughout the country and collect a charge for rendering such service. The two Petitioners characterise themselves as 'tour operators'. They state that they are registered with the concerned Service Tax Department ('ST Department'), have regularly been filing returns, have been assessed and are paying the corresponding service tax under the FA. They state that they collect the room charges inclusive of taxes on the basis of the invoices raised by the concerned hotel and pass on the amount so collected to the concerned hotel which in turn pays service tax and other taxes. What is retained by the Petitioners is only the service tax component corresponding to the booking service rendered and this is paid by each Petitioner to the ST Department of the Central Government.
6. The case of the DGCEI, however, is that the two Petitioners are themselves running hotels online. It is urged that once the Petitioners admit that they collect the service tax, even on behalf of the hotels whose rooms are booked online, it is incumbent on the Petitioners to themselves deposit the entire service tax collected. The failure to do so, according to the DGCEI, has resulted in violation of various provisions of the FA by the two Petitioners and deliberate evasion of service tax on their part, warranting initiation of the coercive measure of arrest of their respective officials.
7. The note on the file prepared on 7th January, 2016 by the officer of the DGCEI in the case of MMT mentions that........