Bombay HC pulls up tax department on Vijay Mallya

The Bombay high court on Friday reprimanded both the service tax department and the lawyer of industrialist Vijay Mallya for not following due process of law. The court questioned the service tax department’s seriousness in recovering its dues running into crores of rupees and bringing the guilty to book as it failed to serve two previous notices to Mallya and five other accused. The court also came down heavily on Mallya’s lawyer for seeking pre-arrest bail for his client while the applicant was not present in the court.

Justice C.V. Bhadang was hearing two petitions filed by the department. One application challenged a magistrate court’s order granting anticipatory bail to Mallya and others in the case in which the service tax department is seeking recovery of Rs 32.68 crore in tax. It is alleged that the airline had collected service tax from its passengers during 2010-11, but did not deposit it in the government treasury. The second application sought a direction to Mallya and other directors to appear before the trial court on April 6, the next date of hearing, and also in the high court in this matter. The court criticised the department as it failed to serve notices in time issued by it in September and December 2015. The high court had issued the notices summoning them and seeking their response to the charges levelled against them by the service tax department. However the department served the notices to them only last month.

“If the service tax department was so serious about recovering its dues and bringing the guilty to book, why did it not serve notice to all parties immediately,” asked justice Mr Bhadang. He also asked, “Why did it (the department) wait till March 2 to approach the high court again ”

The department has claimed that Mallya had defaulted on paying service tax of Rs 33 crore from 2008 to 2012. According to allegations, Mallya owns the Centre more than Rs 500 crore as disputed service tax.

While hearing the department’s plea, the high court had issued two notices to Mallya and five other directors of company; however the court was informed that the notices could not be served immediately. As the news of Mallya leaving the country emerged, the department again moved the high court seeking to expedite hearing on their applications.