Tax dept issues order to detain fleet

The service tax department has issued orders to detain all planes belonging to Kingfisher Airlines after the airline failed to pay dues amounting to Rs 75 crore. The order was issued by the service tax department in Mumbai about a fortnight ago.

There was a buzz that even the Airbus A319 aircraft used by Chairman Vijay Mallya was seized. Kingfisher vehemently denied that particular airbus jet used by Mallya had been impounded.

According to details on Directorate General of Civil Aviation’s website, 34 planes are registered in Kingfisher Airline’s name. This includes the plane used by Mallya, with the registration VT-VJM.

Earlier, media reports had said the airline had transferred the plane from Kingfisher to the parent UB Group but DGCA records indicate the plane is still registered with Kingfisher. Some of the Kingfisher planes have been sent abroad for maintenance checks.

According to a source in the service tax department, the airline's dues have been pending since June 2011 and has been paying paltry sums to the department. "An order was issued to detain all Kingfisher planes,'' a officer said adding instructions were issued to customs department in other cities to execute it.

Aircraft being detained would mean the airline would be unable to use the those for commercial purpose, but would be allowed to carry out maintenance.

In response to a query, Kingfisher spokesperson Prakash Mirpuri said only two Kingfisher planes had been impounded.

" We further state that this aircraft (VT-VJM) has not been impounded and is not capable of being impounded as the aircraft is not owned by Kingfisher Airlines which is merely the operator under the non-scheduled operators permit. The certificate of registration clearly mentions the name of the owner, Lessee and further states that the aircraft is mortgaged to Deutsche Bank, London. There is no legal basis on which this aircraft can be subject to any claim by the Service tax authorities,'' he said.

The airline had contested the service tax department's earlier detention orders stating it not owner of the planes and merely a lesse and said the action was unfair and illegal.

“The detention of aircraft is illegal and untenable. No authority has any right whatsoever to detain aircraft owned by overseas lessors. This will give a very wrong signal to any foreigner who wishes to do business in the aviation industry in India,” Prakash Mirpuri, vice president—corporate communications, Kingfisher Airlines said reacting to earlier detentions in December.