The Federation of Hotels and Restaurant Association of India (FHRAI) has written to the Securities Exchange Board of India (SEBI) alleging “inadequacies" in hospitality firm OYO’s reply to the market regulator dated November 23, 2021.
The industry body has said that it is shocked to learn that the Directorate General of GST Investigation (DGGI) has booked a case of evasion of GST/service Tax against OYO and its subsidiary companies.
“Furthermore, some members of FHRAI have received notices from the CGST department to join the investigation and produce documents in relation to their transactions with Oyo,” the FHRAI’S letter to SEBI stated, a copy of which was reviewed by BusinessToday.in.
The hotels representative body further claimed that OYO has not made such disclosures in its Draft Red Herring Prospectus(DRHP), which is in clear violations of the SEBI regulations, on account of which the IPO should be suspended.
When contacted, an OYO spokesperson dismissed the allegations as frivolous and said that its legal team is reviewing the letter moved by FHRAI.
“We strongly deny these allegations. There is no tax evasion by the company. Till date, there is no tax demand against it. Being a responsible law-abiding company, we cooperate with the government agencies for all the information and documents as sought by them,” according to an official statement by OYO.
“In fact, for the last few years, OYO has worked towards making the small hotels and homes universe more organized. The digitization of workflow and booking process has aided better record-keeping for the hotel partner. We have encouraged better tax compliance for our hotel partners. Any hotel being onboarded with OYO has to follow formal processes, maintain paperwork and adhere to the regulatory requirements,” the company told the BusinessToday.in in reply to a query.
BT had earlier reported that OYO is likely to list on stock exchanges early next year to raise $1.2 billion at a nearly $10-12 billion valuation.
However, the hospitality firm is entangled in various legal battles currently amid a smaller rival Zostel, and FHRAI moving SEBI, seeking suspension of its public listing.
The FHRAI stated in its letter that the Supreme Court has admitted its appeal against the National Company Law Appellate Tribunal's (NCLAT) earlier decision of dismissing the insolvency proceedings against OYO. It added that while the investigation by the Competition Commission of India (CCI) is still pending against OYO, SEBI’s permission to OYO for an IPO is likely to harm the interests of the public shareholders.
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