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AI, Kingfisher bank accounts unfrozen

Air India and KFA made partial payments to service tax dept in last 2 days; AI accounts reactivated, KFA's to be made operational today 

Following MiD DAY's article on how bank accounts of Air India and Kingfisher Airlines (KFA) had been frozen after the two carriers defaulted in paying service tax of Rs 100 crore and Rs 70 crore respectively, the national carrier paid a sum of Rs 8 crore to begin with, while Kingfisher deposited Rs 9 crore, and said it would clear the dues by March. As such, the tax department has made the airline's accounts operational again, and said would do the same for KFA today.

Sushil Solanki, commissioner, service tax, Mumbai, confirmed the action and said, "Post our action, AI officials approached us on Monday (December 5), and paid Rs 8 crore. They have assured us that they will make additional payment of another Rs 2 crore before the weekend. Even after the part payment, Air India will still owe us over Rs 100 crore as service tax collected by the airlines between April and August 2011."

Solanki added that AI has started making regular deposits of service tax with the department after August 2011. After receiving the payment, the department has lifted the restrictions on AI bank account transactions, Solanki confirmed.

Regarding Kingfisher, Solanki said, "We are likely to lift the restriction on Kingfisher bank accounts on Wednesday. As part of the first installment, Kingfisher deposited Rs 9 crore towards service tax on Tuesday. We also received a written intimation from the airline stating that they would make the payment in installments and would clear their dues by March 2012."

Senior tax officials told MiD DAY that the move to allow Kingfisher to operate its bank accounts came after Vijay Mallya met Chairman of the Central Board of Excise and Customs (CBEC) S K Goyal on Monday and assured him that the dues would be cleared in installments.

Solanki added, "Last time, it was a verbal commitment, but this time Kingfisher has given a written commitment, so the ban would be lifted".

An official AI spokesperson confirmed with MiD DAY that the frozen bank accounts were operational, but refused to divulge the figures. 

Kingfisher Airlines officials were not available for comment.

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