Kingfisher gets service tax department's notice threatening to seize all aircraft

Kingfisher Airlines hit another turbulent patch with the service tax department issuing the airline a notice to seize all its aircraft. The notice, which was issued a fortnight ago, says the airline cannot fly or ferry its aircraft outside the registered airport premises. Earlier in the day, in a letter to employees, the first since Kingfisher's operating license expired on January 1, promoter Vijay Mallya detailed the steps the company has taken to re-start operations. Read full text of the letter Last month, the service tax department had seized its three aircraft, including a 62-seater ATR - for non-payment of dues. The airline, however, says only two aircraft were impounded and that it's going to challenge the order in the court of law. Mumbai airport authorities have also threatened to issue an eviction notice after the carrier failed to respond to an earlier notice asking it to clear the Rs. 22 crore dues towards parking and navigational charges. "We have yet to hear from Kingfisher Airlines on our notice. They were given seven days' time to clear our dues and so far neither they have responded to the notice nor have made any payment," sources said told PTI earlier this month. They added that the airport operator may now slap an eviction notice on the cash-strapped airline and lease out the space to other carriers. Kingfisher Airlines promoted by liquor-baron Vijay Mallya owes over Rs. 1,000 crore in vendor and tax arrears. According to the revenue department, it has to repay tax dues worth more than Rs. 200 crore to the government. Launched in May 2005, the airline has not reported a single penny in profit and has bank debt over Rs. 7,000 crore and unpaid interest thereon since January. It also has accumulated losses of nearly Rs. 10,000 crore, apart from the salary dues of the past seven months. The Centre for Asia Pacific Aviation has said a fully funded turnaround for Kingfisher would cost at least $1 billion (over Rs 5,000 crore).