Service Tax Dept's attempt to auction Mallya's jet derails for the second time

Service Tax Department receives bids for just Rs 26.5 crore for Mallya's jet Airbus against the reserve price of Rs 152 crore

The Service Tax Department has received a bid of Rs 26.5 crore in the e-auction of the Vijay Mallya’s luxury jet Airbus 319 in Mumbai.

This was the second attempt from the service tax department to auction the Mallya jet closed on August 19.

The reserve price was kept Rs 152 crore same as it was in the first auction.

Two bidders participated in this bid are SGI Commex Ltd, a Mumbai-based company into Manufacturing of Metals & Chemicals & and UAE- based aviation support company Alna Aero Distribution and Financial Holding (AADFH).

Among these two, the highest bid was offered by SGI Commex Ltd.

"The maximum bid we had received was quite lower than the reserve price. We are least hopeful that we could accept this bid. There is a possibility that department might go for another attempt soon, but that would be decided by the auction committee" said a senior officer of service tax department. 

However, this bid was marginally up from the last bid it had received which was only Rs 1.09 crore. 

The luxury aircraft of Mallya is owned by C J Leasing (Cayman) Ltd and was given on lease to Kingfisher.

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.

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.