Sahara, Jet squabble over tax liability lands in court

Written by Corporate Bureau | Mumbai | Updated: Apr 1 2009, 05:40am hrs
Sahara airlines
The Sahara Group has dragged private carrier Jet Airways to court over its alleged default in the payment of instalments for the erstwhile Air Sahara. Jet had acquired the airline in 2007. The Sahara Group, which previously owned Air Sahara, obtained a decree from the Bombay High Court on Monday to attach Jets properties, but Jet moved the court on Tuesday, following which it received a stay on the attachment decree.

Sahara had earlier filed an application against Jet in court on March 26 alleging that Jet had partly defaulted in the payment of annual instalments. In 2007, Jet acquired Sahara Airlines for Rs 1,450 crore, of which it made an upfront payment of Rs 900 crore and the remaining Rs 550 crore was to be paid in four instalments over the next four years.

Sahara had started attaching Jets movable property on Tuesday morning after obtaining the attachment decree from the court. Justice SC Dharmadhikari, who is hearing the case, in his order on Jets subsequent plea said his decree would remain unaffected, but there would be no further attachment. The judge also asked Jet to file an undertaking by April 3 that it would not create third-party rights with respect to its movable propertyincluding some 40 aircraftuntil further orders.

Jets lawyer, Janak Dwarkadas, told the court that in March 2008, the income-tax department had demanded dues of Rs 107 crore from Sahara India Airlines (now called JetLite). According to Jet, this amount was due from Sahara Group, as it pertained to a period before its acquisition of the airline.

Dwarkadas, in his plea, said that in March 2008, while paying Sahara the instalment of Rs 137 crore, Jet deducted Rs 37 crore against the IT dues. This year, too, Jet deducted Rs 50 crore on the same account. He further argued that Sahara has now taken a stand that it is not liable to pay the IT dues. He argued that Sahara Group had indemnified Jet from all tax liabilities above Rs 50 crore. The matter will now be heard on April 9.