India

India's Kingfisher airline asked to pay service tax

Kingfisher counter
Image caption Kingfisher's staff have not been paid for months

India's tax authorities have asked Kingfisher airlines to pay 600m rupees ($11.84m; £7.4m) owing in service tax, a finance ministry official has said.

The airline's bank accounts were frozen in February for non-payment of taxes. They were unfrozen on Sunday.

The cash-strapped airline owes money to airports, tax authorities, lenders and its own staff.

Workers called off a planned strike on Tuesday after an assurance from the airline that they would be paid.

'No leeway'

"Kingfisher paid 200m rupees service tax last month and they have promised that they will try to pay the arrears as early as they can. Arrears are now about 600m rupees," chairman of the Central Board of Excise and Customs SK Goel told reporters.

"Whatever dues are there, they have to pay. There is no question of leeway. They have to turn over whatever service tax they have collected from you and me," Mr Goel said.

After the airline's bank accounts were unfrozen, Kingfisher Chairman and Managing Director Vijay Mallya told workers his priority was to pay the staff.

Mr Mallya said all junior staff would be paid by Wednesday and engineers and pilots would be paid early next week.

The employees initially threatened to go on strike unless they were paid by Tuesday evening, but later called it off.

The staff have not been paid since December.

The airline has cancelled dozens of flights recently due to the cash crunch.

It recently suspended all international operations and cut down on local routes.

Kingfisher has been struggling to maintain its day-to-day operations after banks refused to lend more to the debt-laden carrier.

The airline has never made a profit since it was launched in 2005.

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