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CBEC freezes Kingfisher's bank account

NEW DELHI: Compounding the troubles of the debt-ridden Kingfisher Airlines, the excise authorities have frozen the bank account of the carrier for its failure to pay service tax dues of about

Published: 24th February 2012 09:26 PM  |   Last Updated: 16th May 2012 06:02 PM   |  A+A-

NEW DELHI: Compounding the troubles of the debt-ridden Kingfisher Airlines, the excise authorities have frozen the bank account of the carrier for its failure to pay service tax dues of about Rs 35 crore.

"They were supposed to clear their arrears by paying certain amount. They had agreed to pay Rs 1 crore every day," Chairman of the Central Board of Excise and Customs (CBEC) S K Goel said here at a function to mark the Central Excise Day.

But the airline has not been paying for the past few days. "So we have frozen their accounts 2-3 days ago by issuing a letter to the bank," he said.

Kingfisher had service tax dues of about Rs 70 crore as of November 2011 and the company had promised the tax authorities to clear them in installments, he said.

"They have paid about Rs 35 crore upto now. Nearly half (of the dues) they have paid, half is still arrears," the CBEC chief said.

Meanwhile, the 18-bank consortium of lenders to the airline is expected to meet again on February 29 or a day after to take a final call on whether or not to extend fresh credit line to it.

The consortium will also discuss the viability report prepared by SBI Caps.

"The bankers are meeting again on Wednesday or Thursday next. We hope some concrete outcomes from that meeting," a Central Bank of India official told PTI.

According to bankers, the Vijay Mallya-promoted airline needs an urgent fund infusion of Rs 2,200 crore to stay afloat.

The consortium is meeting again in the backdrop of reported refusal by Mallya to stand personal guarantee for new loans. Bankers have been insisting on the promoter brining in at least 25 per cent of its funding needs as fresh equity.

The airline which has curtailed its flights, owes banks and financial institutions Rs 7,057 crore and has accumulated losses of about Rs 6,000 crore.

Earlier, the Central Board of Direct Taxes (CBDT), had also frozen Kingfisher's account for failure to clear outstanding direct taxes. The airline owes over Rs 300 crore tax for two to three assessment years to the IT department, sources said.

"The Kingfisher's bank accounts continue to remain frozen. They wanted several months to clear the dues in instalments, while the IT department wants them to pay within two months," sources added.

Meanwhile, RBI Deputy Governor K C Chakrabarty said the stress being faced by banks from their exposures to the aviation sector is a "manageable problem".

"Yes, aviation is a problem ... a problem, at this stage we feel is manageable," he said.

Aviation companies, led by Kingfisher Airlines and Air India, have been witnessing financial problems.



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