MUMBAI, Sept 27: Kingfisher Airlines continues to default on its service tax outstandings, amounting to over Rs 60 crore, a top tax official has said.
“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 told.
He said the recently announced FDI policy for the civil aviation sector offers hope for recovering dues from the debt -ridden airline.
“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.
Meanwhile, he said, Air India also owes dues to the department totalling over Rs 250 crore.
“Air India has told us that they are likely to get an equity infusion and they will pay us out of that,” he said, adding that only a few of the state-run carrier’s accounts have been frozen.
As the department has frozen almost all the accounts of Kingfisher, which is forced to operate only a skeletal schedule, it is very difficult for the ailing carrier to pay 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 payments, the department started freezing its bank accounts from November onwards.
The Vijay Mallya-promoted airline’s total outstanding dues stood at Rs 60 crore after its bank accounts were frozen.
Mallya had 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.
In a strategic move, the government recently allowed up to 49 per cent direct equity holding by foreign carriers in domestic airlines.
Kingfisher, which currently operates only around 50 services a day with just seven aircraft, is hoping to catch the FDI line thrown by government to bail itself out of the fund crunch.
Kingfisher owes over Rs 7,000 crore to 17 banks in the long-term debt besides the income tax obligation apart from accumulated losses of around Rs 8,000 crore. (PTI)
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