After extending several deadlines for the beleaguered carrier Kingfisher Airlines for the payment of service tax, the government is finally considering the option of prosecuting its chairman Vijay Mallya who now faces the risk of getting three years imprisonment under the Finance Act, 2011.
According to the chairperson of Central Board of Excise & Customs, Praveen Mahajan, the finance minister P Chidambaram himself has asked its officials to look at all possibilities to recover the due amount from the grounded airline.
“Prosecution also might happen...But everything takes time. There are various steps you have to take before you prosecute some body,” said Mahajan.
“Finance minister P Chidambaram has told CBDT and CBEC to get together and plan it out and whether it involves talking to regulator or whatever,” she added.
The government had introduced section 89 in the Finance Act, 2011 to make stringent rules against the defaulting companies. According to the section 89 in the Finance Act, the government can launch prosecution against offence like ‘collection of any amount as service tax but failure to pay the amount so collected to the credit of central government beyond a period of six months from the date on which such payment becomes due’.
The section provides that the violator shall be punishable with imprisonment for a term which may extend to 3 years in the case of an offence where the amount exceeds fifty lakh rupees. In any other case, the imprisonment may extend to one year.
It is estimated that the airline’s dues are more than Rs200 crore of which more than Rs70 crore is the service tax. The company has failed to clear its dues despite several warnings from the government. The service tax department has already frozen more than 40 bank accounts of the debt-ridden airline for non-payment of dues.
The KFA has not submitted the service tax collected from the passengers since November 2011 and has used the amount for other purposes.