I-T dept attaches Kingfisher Airlines' assets over Rs350-cr tax dues
16 December 2013
The income tax department has attached all assets of grounded Kingfisher Airlines for failure to remit taxes amounting to Rs350 crore, claiming first right to the assets of the cash-strapped airline.
Against this, the defunct airline owes over Rs8,000 crore to its creditors and venders and several hundred crores in unpaid salaries to employees.
Kingfisher, which has not paid its employees since June last year, has also failed to remit taxes deducted from salaries and other payments to its employees for assessment years 2010-11 and 2011-12.
"We have attached all assets of Kingfisher Airlines and are in the process of recovering its dues by sale and attachment of properties of the defaulter company," IT official Lokesha said in a statement on Sunday.
"Kingfisher House at Western Express Highway near the Mumbai domestic airport has been attached under the second schedule of the Income Tax Act, 1961," the official said.
Kingfisher Airlines has also failed to honour the Karnataka High Court directive, issued on 5 December 2012, to pay 50 per cent of the demand and furnish bank guarantee for the balance amount within six weeks, the I-T department pointed out.
Meanwhile, Lokesha pointed out that the Supreme Court had recently dismissed a special leave petition against the high court directive filed by Kingfisher Airline on 16 January 2013.
Against the tax department's claim of Rs350 crore in unpaid taxes the defunct airline owes a consortium of 14 lender banks, aircraft leasing firms, airport operators, state-run oil marketing firms and other vendors over Rs8,000 crore in overdue payments.
The tax department, however, says that under the law the government has the first right of recovery.
"It is a settled proposition of law that the amount due to the government under any statue and, in this case, under the provisions of Income Tax Act, 1961, will have priority over other debts, and as such dues of IT department will have to be settled first before the lender consortium can stake any claim to the property," Lokesha said.
Six other creditors, including IAE International Aero Ltd, RRPF Engine Leasing, Rolls-Royce & Partners Finance, Avions de Transport Regional GIE, and PNB Paribas, which supplied aircraft, components and funds to the crisis-ridden airline, have also filed petitions in the high court to wind up the defunct airline for failing to pay their dues in spite of several reminders.
Kingfisher reported a net loss of Rs4,301 crore for the 2012-13 financial year and the Director General of Civil Aviation (DGCA) has suspended its permit in October 2012 on safety concerns and indefinite strike by its employees.
The airline has an accumulated losses of Rs16,023 crore and a negative net worth of Rs12,919.81 crore as of now.