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New Delhi: In a jolt to business baron Vijay Mallya, the Supreme Court yesterday dismissed a petition by his Kingfisher Airlines challenging the Karnataka High Court’s order directing it to deposit 50 percent of the amount demanded by the income tax department and provide a bank guarantee for the balance.
Dismissing the petition, a bench of Justice R M Lodha, Justice J Chelameswar and Justice Madan B Lokur said the tax demand raised by the income tax department pertained to tax deducted at source from payments made to its staffers by Kingfisher Airlines.
As it dismissed the plea, the court also cold-shouldered the plea by senior counsel Harish Salve seeking adjournment of the hearing for three weeks to enable the airlines to mobilise funds to meet the tax demand.
On January 22, the apex court had given the airline four weeks to neutralise its tax liabilities as Kingfisher said that it was in negotiations with investors for revival of its grounded fleet.
The high court, on December 5, 2012, had ordered the airline to deposit 50 percent of the tax amount and furnish a bank guarantee for the remaining amount.
Kingfisher Airlines, in its petition challenging the high court order, had sought to restrain the income tax department from taking any coercive step against it directly or indirectly.
The high court order, the petition said, would cause “grave hardship” to the airline and the “public at large inasmuch as the petitioner will not be able to revive its business, for which it is making a serious effort”.
The petition said “public money has been invested in the business of the petitioner and, if as a result of impugned order the petitioner is not able to revive its business, grave hardship will be caused to the public at large”.
The total amount the income tax department had asked the airline to pay towards its alleged outstanding tax liabilities for assessment year 2010-11 to assessment year 2012-13 was Rs 64,55,78,484.
This was the amount the income tax department had mentioned in its May 17/18, 2012 notices to various banks about the payment allegedly due from the airline.
The petition said that Kingfisher was operating 350 flights a day with more than 60 aircraft, but due to aggravation of a financial crisis and the consequent temporary suspension of its licence by the country’s aviation regulator, its operations had been suspended.