SC dismisses Kingfisher's plea against tax demand

Last Updated: Fri, Mar 08, 2013 14:40 hrs

New Delhi, March 8 (IANS) In a jolt to business baron Vijay Mallya, the Supreme Court Friday dismissed a petition by his Kingfisher Airlines challenging the Karnataka High Court order directing it to deposit 50 percent of the amount demanded by the income tax department and provide a bank guarantee for the balance.

Dismissing the petition, a bench of Justice R.M. Lodha, Justice J.Chelameswar and Justice Madan B. Lokur said the tax demand raised by the income tax department pertained to tax deducted at source from the payments made to its staffers by the KFA.

As it dismissed the plea, the court also cold-shouldered the plea by senior counsel Harish Salve seeking the adjournment of the hearing for another three weeks to enable the airlines to mobilize funds to meet the tax demand.

The apex court had Jan 22 given the airlines four weeks time to neutralize its tax liabilities as Kingfisher said that it was in negotiations with the investors for the revival of its grounded fleet.

The high court by its Dec 5, 2012, order had asked the airlines to deposit the 50 percent tax amount and furnish the bank guarantee for the same.

Kingfisher Airlines, in its petition, while challenging the high court order, had sought to restrain the income tax department from taking any coercive step against it directly or indirectly.

The high court order, the petition had said, would cause "grave hardship" to the airline and the "public at large in as much the petitioner will not be able to revive its business, for which it is making a serious effort".

The petition had said that "public money has been invested in the business of the petitioner and if as a result of impugned order, the petitioner is not able to revive its business, gave hardship will be caused to the public at large".

The total amount that the income tax department had asked the airlines to pay towards its alleged outstanding tax liabilities pertaining to assessment year 2010-11 to assessment year 2012-13 is Rs.264,55,78,484.

This is the amount that the income tax department had mentioned in its May 17/18, 2012 notices to various banks for the payment that was allegedly due by the airlines.

The petition had said that Kingfisher was operating 350 flights a day with more than 60 aircraft, but due to aggravation of financial crisis and the consequent temporary suspension of its licence by the the country's aviation regulator, its operations have been suspended.

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