In a rude shock to debt-ridden Air India and Kingfisher, the service tax department has frozen some of their bank accounts for non-payment of the levy to the tune of Rs 220 crore.
"We have frozen 11 accounts of Air India and 10 accounts of Kingfisher Airlines for defaulting on service tax payments over the past five days. While Air India owes us a staggering Rs 150 crore in dues, the amount from Kingfisher is about Rs 70 crore," Commissioner of service tax, Zone 1 (Mumbai Commissionerate, Central Board of Excise and Customs) SK Solanki said in Mumbai on Thursday.
Solanki further said both the airlines have defaulted on their payment of the levy though they collected the same from their customers. He also said actions had to be initiated against the airlines because they failed to clear their dues in the "sufficient time" given to them.
When contacted, an Air India spokesperson acknowledged the development and said it is hopeful of making a part payment to the department today.
"Our objective is to defreeze the accounts," he said.
A Kingfisher spokesperson said, "No comments."
According to the department, Kingfisher owes the sum for the April-September period and Air India's is for the period between April and August.
Significantly, for liquor baron Vijay Mallya-promoted Kingfisher, this is the second time within a month that its account has been frozen by the service tax department.
The Kingfisher account was first frozen for two days in the first week of last month and it was only after getting an assurance from the airline officials that they would deposit the dues in three installments that the department lifted its order, Solanki said.