The crisis at Kingfisher Airlines escalated on Saturday, with the service tax department freezing as many as 40 bank accounts of the already crippled airline for non-payment of dues worth Rs 40 crore.
Service tax commissioner SK Solanki said, “Over Thursday and Friday, we froze 40 bank accounts of Kingfisher Airlines. They failed to meet the February 29 deadline to make the payments. The airline owes Rs 40 crore to the department.”
This is the fourth time in as many months that the service tax department has frozen its bank accounts. Late last month, the income tax department had also frozen the carrier’s bank accounts for not depositing tax deducted at source.
Asked whether the airline had communicated with the department, he said, “Not yet, as today is a Saturday. We hope to hear from them on Monday.”
The move follows airline’s failure to make a Rs 20-crore payment by February 29, as promised. A Kingfisher spokesperson could not be immediately reached for comments. The airline was given time till February 29 to clear part payment and March 31 to pay all arrears worth Rs 70 crore. Since the account was frozen first in early November, the airline had paid only a little over Rs 30 crore, Solanki said. It had paid Rs 10 crore in December, after its accounts were frozen early that month. It had also paid Rs 20 crore in January and had promised to pay Rs 20 crore in February.
S K Goel, chairman of the Central Board of Excise and Customs, under which the service tax department falls, had said on February 22 the airline had to clear indirect tax dues of Rs 70 crore by March 31.
“Kingfisher has an outstanding service tax dues of Rs 70 crore and the company had promised to pay in installments,” Goel had said.
The beleaguered airline has been in a financial mess and is unable to meet its obligations, including paying salaries to its employees, for months on end now.
Following continuous non-payment of salaries, last week, a section of the airline’s engineers went on a ‘tools-down’ protest for a day, even as chairman Vijay Mallya, in an internal note, promised to clear all salary arrears at the earliest, saying he had made arrangements for this.
As crisis deepened and salaries did not come by, employees left the crippled organisation en-masse.
Over 60 pilots have left so far in the past few months alone. The airline then reduced its flights beginning mid-October. From 400 flights a day, it is operating only 170 flights now, using just 28 of its 64-strong fleet.
The airline, which has never recorded a profit since it was launched in May 2005, reported a net loss of Rs 444.26 crore in the December quarter, owing to high fuel costs and a weak rupee.
