Mallya may face prosecution for not paying tax arrears

The indirect tax department on Thursday hinted that Vijay Mallya, owner of the grounded Kingfisher Airlines, may face prosecution in a service tax evasion case.

"Prosecution is definitely a provision there in the Act. And that decision of taking action on Kingfisher owner for not paying service tax arrears will be taken by the concerned commissioner," Lipika Majumdar Roy Chowdhury, member of the Central Board of Excise and Customs, said.

"The commissioners are trying their best to recover the amount and some amounts have been recovered. But there were several show-cause notices which are in the process of adjudication," she said after Finance Minister P Chidambaram released a booklet on frequently asked questions on a voluntary compliance encouragement scheme for service tax.

The grounded airline owes about Rs 190 crore (Rs 1.9 billion) to the service tax department, of which Rs 127 crore (Rs 1.27 billion) is under litigation as of December 2012.

Section 91, which was incorporated in this year's Finance Bill, provides power to arrest a person for non-payment of collected service tax by an officer not below the rank of Superintendent of Central Excise.

The Bill, which was passed on May 10, imposes a penalty on a person or company liable to pay service tax and fails to take a registration number from the government.

Last year, the service tax department had seized three aircraft of Kingfisher Airlines, including a 62-seater ATR, for non-payment of dues.