After the income tax department, the service tax department is also planning to take Kingfisher Airlines to court over non-payment of dues.
Central Board of Excise & Customs Chairman S K Goel said the airline had evaded service tax collected from travellers, for which there was a criminal liability. He clarified legal proceedings could be initiated even after it made the payment, because the event of tax evasion had already happened.
“Jet Airways has cleared its service tax dues of Rs 69 crore, but Kingfisher has still not cleared its dues of Rs 76 crore. We have frozen its 40 bank accounts as well as the IATA account,” Goel said.
The airline had informed CBEC it would pay the dues by March 31. It was to pay Rs 1 crore every day to clear its indirect tax dues with the department. But, after non-payment last month, the department issued a letter to its banks instructing them to freeze its accounts.
Penalty under Section 78 is a minimum of the amount of service tax sought to be evaded and a maximum of twice the amount of service tax. This is in addition to the tax and interest payable.
According to Section 76, “any person, liable to pay service tax, who fails to pay such tax, shall pay, in addition to such tax and the interest on that tax amount, a penalty which shall not be less than Rs 200 for every day during which such failure continues or at the rate of two per cent of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax”.
The Vijay Mallya-led airline owes over Rs 300 crore of TDS (tax deducted at source) to the income tax department. It was recently sent a showcause notice asking it to explain why it failed to make the TDS payment.
The showcause notice was issued under Section 276 B of the Income Tax Act. Under this section, if a person fails to pay to the credit of the central government, the tax deducted at source by him, or the tax payable by him, he shall be punishable with rigorous imprisonment for a term not less than three months, but that may extend to seven years, with fine.