‘Kingfisher Airlines asked to pay Rs.60 crore service tax’

Cash-strapped Kingfisher Airlines has been asked to pay Rs.60 crore which it owes as service tax, a senior fianance ministry official said Wednesday.

According to S.K. Goel, chairman, Central Board of Excise and Customs, the airline has been asked to pay the amount and no concessions will be provided to the carrier.

“There is no question of leeway to Kingfisher on payment of service tax,” Goel told reporters here.

Earlier, the service tax department — for the fourth time in four months — had frozen 40 bank accounts belonging to the airlines as it had failed to meet the Feb 29 deadline for clearing its dues of Rs.40 crore to the department.

Kingfisher Airlines chairman Vijay Mallya April 2 wrote to the airline’s staff informing them that the company would be able to pay their overdue salaries as its bank accounts have been un-frozen following payments worth Rs.44 crore to the income tax department and Rs.20 crore as service tax.

“All junior staff will be paid before Easter, April 4. All pilots and engineers will be paid April 9 and 10,” he wrote. “My focus now is to start paying your seriously overdue salaries.”

The freeze on the airlines’ accounts had also led to its suspension from the International Air Transport Association’s (IATA) inter-airline transaction body ICH (IATA Clearing House) and BSP (Billing and Settlement Plan) accounts on March 9 – on account of non-payment of dues.

The airline, which later on curtailed its international flight plans, blamed the seizure of its bank accounts in February by the Income Tax (IT) department as the main hurdle in clearing of dues.

On March 27, the airline had also suspended operations to several cities and asked its staff to stay home till it managed fresh funding.

Kingfisher’s woes were exacerbated Feb 18 when its employees in Kolkata went on a flash strike as they had not received their salaries for several months.

Kingfisher has a debt of Rs.7,057.08 crore. Its net loss widened to Rs.444.27 crore for the quarter ended Dec 31, 2011, from Rs.253.69 crore in the October-December quarter in the last fiscal.

The airline claimed that it had started the summer schedule with about 120 daily flights and 20 dedicated aircraft.