Fresh trouble confronted two of India's leading airlines,
Vijay Mallya-owned Kingfisher Airlines and state-owned
Air India , when the Mumbai Service Tax Department
froze bank accounts of the two over non-payment of dues.
The cash-strapped Kingfisher Airlines and Air India owe the department Rs 70 crore and Rs 100 crore, respectively.
SPECIAL: Only a stroke of genius, luck can save Kingfisher This effectively means that while both the companies collected the service tax on the air tickets they sold from their customers, they did not deposit it with the department.
This is the second time that
Kingfisher's account has been frozen in the last month alone. The account was first frozen for two days in the first week of November and it was only after getting an assurance from Kingfisher officials that they would deposit the due amount in three installments that the service tax department lifted its order.
EXCLUSIVE: Two airlines tryng to ensure Kingfisher collapse, says Vijay Mallya According to a
MidDay report, Mumbai Service Tax commissioner Sushil Solanki confirmed the action and said: "We have initiated action against both the airlines for non-payment of service tax under section 87 of the Finance Act 1994 (see box) and have frozen 6 bank accounts of Air India and 7 Kingfisher accounts in the last five days. Also specific instructions have been given to the respective banks to ensure that no withdrawal transactions are allowed in any of the two airlines' accounts, until after getting a clearance from the department."
PERSPECTIVE: Kingfisher and what ails India's aviation sector Commenting on whether their action could paralyse the day-to-day functioning of the two airlines, Solanki is reported by the paper to have said: "The airline companies have already charged service tax to the customers on both their domestic and international sectors. According to our records, Kingfisher owes us the sum for the period between April and September and Air India owe us for the period between April and August, this year. Usually, airlines charge Rs 155 per ticket on their domestic sector towards service tax and Rs 773 on international journeys in economy class."
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