Vijay Mallya Case Identical to Subrata Roy’s, Service Tax Department Lawyer Argues

Arguments concluded before the Additional Chief Metropolitian Magistrate in Mumbai, where the service tax department had asked for non-bailable warrants against chairman and managing director of the now-defunct Kingfisher Airlines, Vijay Mallya, and Sanjay Agarwal, the former chief executive officer of the airline. The court will pass an order on July 18.

Kingfisher Airlines had collected service tax in excess of Rs 55 crore from customers, for an 18 month period between 2011-2012, but failed to deposit it with the government, which is an offence under Section 89(1)d of the Finance Act 1994. The two applications for non-bailable warrants, which the court heard on Tuesday, were made on April 6 and June 7, when for the third consecutive time the two accused Mallya and Agarwal failed to appear in court.

“Mallya, Agarwal Wilful Absconders”

The counsel for the service tax department, Advait Sethna, argued that Mallya and Agarwal – who are currently not in India – were “wilful absconders”.

He added they were in violation of their bail conditions and pleaded against any leniency being shown to them. He claimed that Mallya's excuse, that he was overseas to arrange for funds, was mere eyewash and an attempt to obstruct justice.

Drawing a parallel with the Subrata Roy case, where the Supreme Court had observed that there is no distinction between Subrata Roy and Sahara and that they were one and the same, Sethna said the same applies to Kingfisher Airlines and Mallya.

Mallya counsel, Amit Desai reiterated that his client was overseas “in the ordinary course of business” to arrange money for the resolution of issues with banks and other agencies. He also told the court that the service tax department had attached several hundred crores worth of property which was more than enough to recover the Rs 55 crore owed.

Sethna responded that the attached properties were also being claimed by the banks and the matter of who had first claim was pending before the Karnataka High Court.

The service tax department is also fighting the case on another front at the Bombay High Court, where they have filed an application to quash the bail granted to Mallya and Agarwal in February 2015 by the Chief Metropolitan Magistrate's court, under Section 482 of the Criminal Procedure Code .

The department's lawyer contended that, though a violation of Section 89(1) d of the Finance Act is bailable, the fact that it is a continuing offence in this case, makes it non-bailable.