Kingfisher Airlines’ troubles increased on Wednesday, as the income tax (I-T) department issued a show-cause notice and the International Air Transport Association (IATA) suspended the airline from its clearing house for the second time.
In another blow, Hindustan Petroleum Corporation snapped the supply of aviation turbine fuel to the airline in the evening, grounding several flights across the country.
An HPCL executive confirmed fuel supply had been stopped because of non-payment of dues and negotiations were on with the airline. Fuel supply was stopped at all airports from 6 pm. By then, six flights from Mumbai were delayed by three-four hours. A Kingfisher Airlines spokesperson did not respond to an SMS query.
Meanwhile, IATA has suspended Kingfisher’s account because the airline did not clear its dues with the IATA Clearing House, which provides a platform for airlines to settle claims with airlines they have interline agreements with. Suspended airlines have to do it bilaterally.
The airline, in a statement, said it was working with the tax authorities and expected the accounts to be unattached shortly. “As soon as this is done, we will pay our dues to IATA and get reinstated,” it said.
The I-T department’s show-cause notice to Kingfisher Airlines asked it to explain the reasons behind the non-payment of tax deducted at source (TDS). The department is planning to drag the airline to court. The airline has TDS dues of over Rs 300 crore.
“The case will go to courts now. Some part of the payment should come within this financial year and the rest in the next few months. They are asking for a longer period to pay,” said an I-T official, who did not wish to be identified. Kingfisher has time till the end of this month to reply to the notice.
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The official added the notice had been issued under Section 276B 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 is punishable with rigorous imprisonment for a term not less than three months but which may extend to seven years and be accompanied by a fine.
The airline clarified it continued to operate flights to all destinations. “The suspension does not impact our guests travelling on any Kingfisher Airlines flight or our flight schedules,” the release said.