Showing posts with label Service Tax. Show all posts
Showing posts with label Service Tax. Show all posts

Opinion: A date of ignominy in the Kingfisher Airline calendar

2010 Kingfisher Calendar. Copyright KingfisherWorld
Kingfisher is known for its super-sexy swimsuit calendar, featuring some of the most beautiful women in the world, and Kingfisher Airline's Chairman Dr. Vijay Mallya's son, Sidhartha, may love cavorting on the beach with them, but yesterday, October 4, 2012, witnessed a tragedy, and was, to borrow the words of FDR, a date that will live in infamy for the financially imploding airline.

The wife of one its employees committed suicide due to non-payment of her husband's salary for over six months.

Sushmita Chakraborti was not a model on a fancy calendar, nor would either of the Mallya father or son, like to cavort on the beach with her; she was the poor, 45 year old wife of a retired Indian Air Force officer, Manas Chakraborti, who is working, salary unpaid, as an engineer with Kingfisher Airlines. Living in a LIG (low income group) housing colony in airport suburb of Dwarka, in New Delhi, where she hung herself, she was the mother of an 18 year old college going son.

CNN-IBN reports, in her suicide note, Sushmita wrote,
"My husband works with Kingfisher where they have not paid him salary for the last six months. We are in acute financial crisis and so I am committing suicide"
Kingfisher Airlines logo stained with the blood of the suicide of wife of employee
Mrs. Chakraborti's suicide has stained in blood the Kingfisher Airline's image, and forever damaged the already tarnished the Kingfisher brand, once valued at over Rs. 1,000 Crore. The contagion is already spreading. The Reserve Bank of India has already instructed banks not to use the brand as collateral for loans.

Her death is in stark contrast to the extravagant uber-lavish lifestyle of the Mallyas, which has been loudly condemned across the country, yet shows no sign of abating. Even as Sushmita was dying, Dr. Vijay Mallya was overseas, reportedly on a vacation, leaving the airline CEO, Sanjay Aggarwal, to meet with Government officials, Kingfisher pilots, engineers, and other employees, with the same helpless platitudes that has plagued the airline for over a year. He too, he says, has not been paid his salary.

While many Kingfisher employees held candlelight vigils around the nation, in support of the grieving family, CNN-IBN reported, the airline’s company secretary Bharath Raghavan resigned.

Yesterday too, the airline extended the lockout to October 12, 2012, blaming the employees for "illegally" striking. Talk about the pot calling the kettle black.

Last yesterday, in a clear sign of the political clout of Vijay Mallya, the Income Tax department agreed to unfreeze the airline's bank accounts containing about Rs. 60 Crore. The authorities had frozen these accounts in May this year, when Kingfisher failed to deposit the withheld income taxes, deducted from employees salaries, since March 2009. This apart from non payment of service tax to the Excise department. It is important to note, that there is no sign that either Kingfisher Airlines or Dr. Mallya have cleared this liability.

Continuing the clout, the banks, who are owned more than Rs. 8,000 Crore by Kingfisher, and who, by their own admission, do not have collateral worth more than 10% of the loans, have agreed to release this money towards payment of employee salaries. Now, whether this money will be disbursed to the unpaid employees or squandered in more fancy lifestyle displays, is not known.

As this tumultuous week comes to a close, we offer our sincerest condolences to the Chakraborti family, and condemn the actions of the airline, its leader, and all his political benefactors who have allowed circumstances to degrade in to an abyss, resulting in this tragic act of desperation. Yesterday was a day of ignominy for you Dr. Mallya.

Comments are welcome. Messages of support are welcome. Any defence of Kingfisher or Dr. Vijay Mallya is very welcome. And last but not the least, please do cast your vote in our survey whether Kingfisher Airlines should be allowed to continue or be closed.

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Income tax department re-freezes Kingfisher Airline's bank accounts

The income tax department has frozen two of Kingfisher Airline's bank accounts for alleged non-payment of dues.

However the airline has clarified in a statement
The IT department attached two of our bank accounts on May 24th which was not in accordance with the speaking order of the Hon'ble IT Appelate tribunal during the hearing.

Subsequently, in a written order of May 25th the tribunal set aside the entire demand made by the IT assessing officer. As such there are no tax dues to be currently paid and the attachment orders on two bank accounts have to be lifted.
So the financially strapped carrier will face a few days of trouble till the income tax department will send a release instruction to the banks, something it is loathe to do.

The airline had an income tax outstanding of about Rs. 370 Crore which is essentially the taxes it withheld from employee salaries as TDS (tax deduction at source), but has not remitted to the department.

In March this year, Kingfisher had withdrawn from the international airline body IATA and took back its deposits of around $8 million. It used these funds to deposit Rs. 44 Crore (approx. $8.8 million at March exchange rates) with the income tax department which caused the Income Tax Tribunal to un-freeze its bank accounts. The airline had also promised to make weekly payment in instalments of Rs. 9 crore.

The airline is now operating on a highly truncated schedule using only 16 aircraft and has dropped from being the second largest domestic carrier in India to the smallest.

The airline also has estimated outstandings of Rs. 40 Crore payable to the service tax department.

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