High Court Reprimands Service Tax Department For Indecision On Auction Of Mallya’s Aircraft
Service tax department’s indecision on Mallya’s aircraft auction irks court.
The Bombay High Court on Wednesday criticised the service tax department for lack of clarity on the re-auction of Vijay Mallya’s personal Airbus A319-13 aircraft, that went under the hammer for the second time on August 18. Mallya’s personal aircraft, which had attracted a paltry Rs 1.09 crore bid in June, registered a bid of approximately Rs 27 crore in the re-auction, but fell well short of the reserve price of Rs 152 crore.
The aircraft was attached by the service tax department in a bid to recover dues worth more than Rs 1,000 crore, which Mallya allegedly owes the department.
The service tax department had filed an affidavit on August 22 confirming the sale despite the top bid falling short of the reserve price by 81.9 percent.
Thereafter the Mumbai International Airport Ltd. (MIAL) filed a petition asking the service tax department to move the aircraft from the airport hangar it had occupied for over two years and seeking Rs 4 crore from the winning bidder toward parking and maintenance charges.
As that case was being heard in the Bombay High Court today, the service tax department filed a motion asking the court to annul the sale which had been approved by the division bench in an order dated August 22.
Anil Singh, additional solicitor general for Government of India, appearing for the department, told the court that since the sale took place at a discount to the reserve price it was in violation of service tax department guidelines.
On hearing this argument, a division bench of Justices Dharmadhikari and Collabawalla observed that this was an attempt by the department to absolve itself of the responsibility of a flawed sale.
The company which made the winning bid for the aircraft – SGI Commex Ltd. – was also reprimanded for not having made payments within 21 days, as per the terms of the auction.
The Bombay High Court bench observed that there appeared to be a connivance between service tax officials and the company. SGI Commex has been directed to file an affidavit on September 19 detailing a payment schedule. The judges also observed that if they were not satisfied with the terms, they would cancel the sale and order a criminal investigation into the auction, which would also involve investigating the role of the service tax department. The high court also observed that MIAL and the service tax department would be free to pursue civil actions for damages against the company.
The court was hearing a petition by the Mumbai International Airport Ltd. (MIAL), asking the service tax department to remove the aircraft from the hangar which it had been occupying for the last two years. MIAL also sought approximately Rs 4 crore in hangar and maintenance charges from SGI Commex.