ModiLuft To Pay Rs 13.5 Crore Tax To Resume Operations

New Delhi, May 10: | Updated: May 11 2002, 05:30am hrs
Royal Airways, formerly ModiLuft, has proposed to pay Rs 13.5 crore inland air travel tax (IATT) dues to the government to resume airline operations.

Royal Airways has made this offer in a proposal submitted to the Delhi High Court on Thursday. As part of the proposal, the airline expressed its willingness to pay Rs 13.5 crore to customs department to obtain no objection certificate (NOC) needed for re-launching operations.

Union government counsel Sanjay Jain, however, told the division bench comprising Justice Dalvir Bhandari and Justice Vikramjit Sen that the company should not only pay Rs 13.5 crore but the total amount due to the government.

The Court asked the counsel for ModiLuft, M Chandrashekharan to take instructions from the company on its commitment to pay the remaining dues if the same was ultimately upheld by the Court. The Court also asked the government counsel to work out the latest amount that ModiLuft owed to the government.

For the period from March 1996 to August 1996, ModiLuft owed about Rs 8.5 crore towards IATT. This amount represented the travel tax which ModiLuft had collected from passengers but not paid to the government. As a result, the government impounded its aircraft which ModiLuft had taken on lease from Air UK Leasing Limited.

The total liability against Royal Airways as on January 13, 1997 was calculated at Rs 12.5 crore. Air UK Leasing approached the Delhi High Court for the release of its aircraft. The Court directed the release of the aircraft subject to Air UK depositing Rs 8 crore and furnishing a bank guarantee of Rs 4.5 crore to the government with the undertaking to pay back the same, in case the petition was ultimately dismissed. Air UK deposited the amount and the aircraft was released.

The proposal now submitted by Royal Airways for the consideration of the Delhi High Court states that it shall deposit the principal sum of IATT dues of Rs 8.5 crore with the Court, provided the customs department agreed to issue a NOC. The company has also offered to pay only 50 per cent of the penalty of Rs 10 crore imposed by the commissioner (appeals) and upheld by the revisionary authority in eight equal installments starting from the expiry of six months of the issue of the NOC by the customs department.