Solitary low bid forces cancellation of Vijay Mallya's jet e-auction

The service tax department, which received on bid of Rs 1.09 crore, had been hoping to raise up to Rs 200 crore from the sale

The service tax department has rejected the online auction of the Vijay Mallya’s luxury jet Airbus 319 in Mumbai as a solitary bidder had placed a bid of Rs 1.09 crore. The e-auction for Mallya’s private plane closed on June 30.
 
UAE- based aviation support company Alna Aero Distribution and Financial Holding (AADFH) was the only bidder who qualified for the auction. The company has deposited earnest money of Rs 1 crore as per the auction norms.
 
“The bid was rejected due to the price quoted, we will seek government approval to do the process again," a senior official told Business Standard.

 

The service tax department was hoping to raise Rs 150 crore – Rs 200 crore from the auction. The department has kept a reserve price of Rs 152 crore.
 
The service tax authorities had seized the Airbus in year 2013 in a bid to recover part of the Rs 938-crore service tax due from the now defunct Kingfisher Airlines. The aircraft is owned by C J Leasing (Cayman) Ltd and was given on lease to Kingfisher Airlines.
 
The e-auction was conducted by Metal Strap Trading Corporation, a state-owned firm engaged in domestic and international trading activity.
 

Last year, Mumbai International Airport Pvt Ltd (MIAL) had sold an 11-seater plane to Silent Enterprises for Rs 22 lakh which later dismantled the aircraft to sell the scrap.
 
According to the department's application in the Bombay High Court last year, Mallya owes Rs 32.68 crore as service tax collected from tickets sold to passengers of Kingfisher Airlines. This is the admitted liability of the now-defunct airline. The total unpaid dues of the department stand at about Rs 800 crore. The court had observed earlier that there was no legal obstruction to auctioning the aircraft.
 
Mallya, who is reportedly in the UK, owes Rs 6,963 crore to a consortium of bankers led by the State Bank of India, for loans taken to run Kingfisher Airlines. The banks say Mallya had provided personal guarantees, apart from pledging his stake in UB Group companies, to raise funds for the airline.