HC to study E&Y report on Sahara-Jet deal

The Bombay High Court today said it would go through a due diligence report by Ernst & Young to find out whether it contained any mention about tax liability of Rs 107 crore of Sahara Airlines (now Jetlite), which was taken over by Jet Airways.

Hearing a dispute between the two corporate entities over the multi-crore buyout, Justice D Y Chandrachud fixed September 2 and 3 for deciding the issue.

Sahara has taken a stand that it was not liable to pay the tax dues.

Global consultancy firm E&Y was appointed by the Sahara Group in 2006 to carry out due diligence exercise for the deal.

Sahara India Commercial Communication (SICCL) had in March last year moved the Bombay High Court contending that the Naresh Goyal-led airline was liable to pay Rs 2,000 crore instead of the renegotiated amount of Rs 1,450 crore agreed between them as it had defaulted on payment.

Sahara submitted that the takeover price had been brought down to Rs 1,450 crore from Rs 2,000 crore provided Jet Airways would not default on payment.

Sahara said Jet had defaulted on payment and, therefore, concession on the takeover deal was not tenable.

Jet Airways bought Sahara Airlines in April 2007 for Rs 1,450 crore after an arbitration award. It paid Rs 900 crore and agreed to pay the balance in four installments.

Jet's lawyer had earlier contended that in March 2008 the Income Tax Department demanded tax dues of Rs 107 crore from Sahara.

According to Jet, this amount was due from Sahara Group as it pertained to the period before the acquisition.

While paying Sahara the installment of Rs 137 crore last March, Jet deducted Rs 37 crore against the IT dues. Again in 2009, Jet had deducted another Rs 50 crore towards tax liability.