Kingfisher, Jet plunge over non-payment of tax dues

Kingfisher Airlines and national carrier Air India have had their bank accounts frozen as the two airlines have failed to depositservice tax payments, according to media reports on Thursday. Media reports also say that the the service tax department has issued three show-cause notices to Jet Airways on “non-payment of tax on import of various services amounting to Rs1,128.66 crore for a period of seven years from 2003-04.”

Reacting to the news, shares of Kingfisher plunged 6 percent to Rs 23.60 while those of Jet Airways were down 5 percent at Rs 238.50 in early trade today.

While Air India owes the service tax department around Rs 100 crore, Kingfisher Airlines owes it approximately Rs 70 crore. Both airlines have collected service tax from fliers but have failed to clear their dues.

An NDTV article quotes Sushil Solanki, commissioner, service tax, Mumbai as confirming that they have frozen six bank accounts of Air India and seven Kingfisher accounts in the past five days. “According to Solanki, the action was taken after giving sufficient time and intimation to both the carriers for making the payment within a stipulated time period, but they failed nonetheless,” the article said.

However, this is not the first time that the service tax department has resorted to this measure. Kingfisher’s accounts were frozen twice in November as the airline failed to deposit its first installement. It was only when officials from Kingfisher assured the department that the payments will be made in three installments that the order was lifted.

On 1 December, the Mumbai International Airport authorities threatened to put the airline on a cash-carry mode if it failed to pay its Rs 90 crore dues.

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You can read the entire NDTV article here .