Service Tax Department Seeks A Week’s Time To Resolve Mallya’s Aircraft Auction

The service tax department on Monday asked the Bombay High Court for one week's time to convince the Central Board of Excise and Customs (CBEC) to accept the Rs 27.3 crore bid for Vijay Mallya's private Airbus A319-13 aircraft.

The aircraft was attached by the service tax department in a bid to recover Rs 1,000 crore in dues that Mallya allegedly owes the department.

A little-known company, SGI Commex Ltd, had emerged as the highest bidder in an online auction held on August 18 to auction the aircraft. The department had set a reserve price of Rs 152 crore for the aircraft.

The department had failed to inform the court on August 22 that the auction requires the approval of the CBEC in order to be considered valid, Additional Solicitor General Anil Singh, appearing for the service tax department, told the court on Monday.

The service tax department had filed an affidavit on August 22 confirming the sale of the aircraft, and was asked by the court to confirm SGI Commex's bid. 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. On September 14, 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 told the court that since the sale took place at a discount of more than 80 percent to the reserve price it was in violation of service tax department guidelines.

On Monday, a division bench of Justices Dharmadhikari and Collabawala asked Singh if the department wished to withdraw the motion asking for a recall, in which case the department would have to remove the aircraft from its hangar at the Mumbai International Airport.

The department asked for a week's time to respond, which the bench accepted but after making a number of caustic observations.

The court observed that “if the Central Bureau of Investigation were the enter the scene, the whole script and the role of every character would come out.”

Meanwhile, Mohit Chaudhary appearing for SGI Commex, filed an affidavit detailing a payment schedule which he claimed was in keeping with the terms of the auction, and said that the service tax department had failed to confirm their bid.

The next hearing is scheduled for September 26.

The matter relates to 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.