Failed to pay tax, Kingfisher, AI's bank A/Cs frozen

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Kingfisher - Air India
New Delhi, Dec 8: Extending the jittery of two of the most prestigious airlines in India - Kingfisher and Air India (AI), the service tax department blocked seven and six bank accounts of the two carriers respectively.

While Vijay Mallya owned Kingfisher owes the service tax department Rs 70 crore, the national carrier, Air India owes Rs 100 crore.

The two airlines have been accused of taking the service tax from its customers by selling air tickets and not paying their service taxes.

Confirming the news, the Commissioner of the service tax, Mumbai, Sushil Solanki said, "We have initiated action against both the airline companies for non-payment of service tax under section 87 of the Finance Act 1994 (see box) and have frozen 6 bank accounts of Air India and 7 Kingfisher accounts in the last five days."

Continuing the department's wrath against Kingfisher and Air India, Solanki also added, "Also specific instructions have been given to the respective banks to ensure that no withdrawal transactions are allowed in any of the two airlines' accounts, until after getting a clearance from the department."

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