Kingfisher to pay only Rs 10-cr service tax dues till March-end

Cash-strapped Kingfisher Airlines, which has agreed to pay only up to Rs 10 crore of its Rs 76-crore service tax dues this financial year, a top government official said.

The beleaguered airline, which has faced stern warnings from the regulator director general civil aviation (DGCA) and the aviation ministry for failing to come up with a workable flight schedule and revival plan, owes Rs 76 crore in service tax arrears, which it has already collected from passengers.

"Kingfisher has dues to the tune of Rs 76 crore; we are talking to them. They will be depositing about Rs 10 crore this month," Central Board of Excise and Customs (CBEC) chairman S K Goel said. "They have told us that they are going through a cash -crunch and need some more time to pay up."

Goel said according to their talks, the airline will pay only Rs 5 - 10 crore of its dues before the end of the year but the private carrier should not worry about any immediate penal action. He said the service tax department has been freezing Kingfisher's bank accounts since October due to the non- payment. As of now, it has frozen as many as 40 accounts. The department will de-freeze some accounts to facilitate payment of the remaining dues, Goel said, without giving a number. On the penal action the department threatened early this week, the CBEC chief pointed to a legal provision wherein a defaulter can take up to 12 months to pay the dues.

But once the deadline is crossed, the department will exercise its legal options, Goel added. The airline, which has a debt of Rs 7,000 crore and an accumulated loss of over Rs 6,000 crore, has been operating only 16 of its 64 aircraft since last month and has quit Kolkata and Hyderabad routes completely, apart from winding up its international operations last week. DGCA and the Aviation Ministry have threatened to cancel the seven-year-old airline's licence if it is unable to come up with an operational schedule next week.