A local court has ordered city police to probe a complaint which alleged that a company running a chain of five-star hotels had misappropriated an amount of Rs. three crore by deducting from staff salaries a portion of tips earned by them.
The deductions were made as TDS had to be paid to the I-T department on the service charges levied in the bills, according to the complaint filed by retired employees of the hotel.
“On going through the contents of the complaint and considering the submissions, I observe that the matter needs to be investigated under the provisions of section 156 (3) of CrPc. Accordingly, the senior police inspector of Marine Drive police station is directed to conduct such a probe and submit his report accordingly,” Additional Chief Metropolitan Magistrate S D Dabhade noted in his order on April 6.
The employees alleged in the complaint that while they were working in different capacities in the banquet department, the hotel, EIH Ltd, deducted 18 per cent of the tips they received towards payment of TDS after it had received a notice from Income Tax department in 1988.
In 1993, it was decided by an Income Tax Tribunal that there is no tax liability on receipt of tips. “However, the management continued to deduct 18 per cent of the tip amounts towards TDS till 2005,” the complaint alleged.
“Even after 2005, the hotel retained the amount illegally till 2014. However, no TDS was ever paid. The management did not return the amount to the concerned employees despite several representations and demands,” the complaint alleged.
Bhushan Bahal, advocate for the employees, argued that misappropriation of any amount even for the short time would amount to offence under section 406 of Indian penal code. In this case, the deductions have been made allegedly from the salaries of employees for over two decades and it is not known where the amount thus collected had gone, Bahal said.
“The company executives have allegedly caused wrongful gain to themselves and wrongful loss to the employees who are retired and aged persons. There are more than 200 employees who are affected,” the advocate alleged.