Air India in trouble: Service tax dept freezes accounts again

The Service Tax Department has once again frozen the bank accounts of the national carrier Air India for non-payment of dues running into a little over Rs 300 crore (Rs 3 billion).

This is the second time in two months that the Central Board of Excise and Customs department has frozen the account of the national carrier.

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In December, the department had frozen as many as 11 accounts of Air India and 10 of the private carrier Kingfisher Airlines, which were later de-frozen following part payments by the airlines.

The development comes even as bankers have reportedly met on Thursday to consider a fresh CDR proposal for the debt-laden flag carrier.

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"Yes, we have frozen 11 bank accounts of Air India as they have not made any payment after the part-payments done last month," a senior official of the Central Board Excise and Customs, who wished not to be identified, told PTI this evening.

As to how much dues are pending, the official said, "after the Rs 8 crore (Rs 80 million) payment AI had made last month, nothing has been paid."

Early this week, Central Board of Excise and Customs (CBEC) chairman SK Goel had said that the debt-ridden Kingfisher Airlines and Air India owed the government a total of over Rs 360 crore towards service tax dues.

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"While Kingfisher Airlines has paid Rs 20 crore (Rs 200 million) towards service tax for December and some arrears, the airline still owes Rs 60.33 crore (Rs 603.3 million)," Goel had said.

The KF had paid Rs 20 crore (Rs 200 million) in January, Goel had said adding the carrier has promised to clear all dues by March-end.

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AI is seeking an equity infusion of Rs 6,600 crore (Rs 66 billion) from government that will enable it to pay interest on fleet acquisition and to meet other expenses including salaries to its 30,000 strong employees for the past two months and allowances for the past five months, which forced a section of cabin crew to strike work early this week.