'Kingfisher owes Rs 60 cr in service tax'

Kingfisher Airlines continues to default on its service tax outstandings, amounting of over Rs 60 crore, and the government move to allow FDI policy in civil aviation sector offers the "only ray of hope" to recover the dues from the debt-ridden airline, according to a top tax official.

Kingfisher has said it is in talks with foreign carriers for bringing in FDI, a move that is expected help it overcome financial troubles.

"Kingfisher Airlines continues to be a defaulter and has an outstanding of over Rs 60 crore. It is defaulting on the weekly payments and most of its bank accounts are frozen," Mumbai Service Tax Commissioner Sushil Solanki said.

As the department has frozen almost all the accounts of the ailing airline, which is forced to operate only a skeletal schedule due to drop in services, it is very difficult for the carrier to pay its dues as cash flows are down to a trickle.

Kingfisher has not been depositing service tax collected from passengers with the department since November last on a regular basis and instead has been diverting it for other purposes on a regular basis.

As the airline started defaulting on tax payment, the department started freezing its bank accounts since November last.

The Vijay Mallya-promoted airline's total outstanding dues stood at Rs 60 crore, from a high of Rs 140 crore, after its bank accounts were frozen.

"A full payment of dues is very difficult and the only way by which the money can come in is via a foreign partner's fund infusion, if it goes through," Solanki said.

Mallya said in Bangalore yesterday that Kingfisher was talking with foreign airlines.

"Yes, we are in talks" he told reporters on the sidelines of the annual general meeting of the UB Group promoted by him.

According to Solanki, the national carrier Air India also owes huge dues to the department totalling over Rs 250 crore.

... contd.

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