Finally, a 'successful bidder' for Mallya's luxury jet

SGI Commex chairman G S Srivastava, an art connoisseur, said the aircraft, an Airbus A319-133 with registration of CJ VT-VJM, will be converted into an art pilgrimage venture

Days after the service tax department held an auction to sell embattled businessman Vijay Mallya's personal jet, little-known SGI Commex today said it emerged as the 'successful bidder' at a price of Rs 27.39 crore ($4.1 million), which is nearly one-sixth of the reserve price.

SGI Commex chairman G S Srivastava, an art connoisseur, said the aircraft, an Airbus A319-133 with registration of CJ VT-VJM, will be converted into an art pilgrimage venture under the label of 'Beyond the Obvious' and that it will not be used as a private carrier.

Srivastava said he has helped corporatise and uplift the art market with his landmark deal of the M F Hussain work 'Our Planet Called Earth Series'. He plans to utilise the aircraft to promote exotic art work ingrained in various temples and religious places across the country through religious tourism, particularly among foreigners.

The latest auction, held as part of the efforts of the department to recover over Rs 800 crore (Rs 8 billion) dues, took place on August 18 after an earlier auction failed on June 30.

The Service Tax department had set Rs 152 crore (Rs 1.52 billion) as the reserve price during both the auctions for the jet, which once served as the private aircraft of the flamboyant businessman.

In the first attempt at auction, a Dubai-based company had offered just Rs 1 crore, which was turned down.

In a statement, the city-based SGI Commex said it has emerged as the successful bidder for the aircraft auction held by MSTC on behalf of the service tax department on August 18, with a bid of $4.1 million. It further said another $3.5 million is estimated to be required to make the aircraft 'air-worthy'.

The auction of the jet was challenged by Mumbai Airport at the Bombay high court claiming unpaid airport fees. As per an order passed on August 22, SGI Commex will have to pay an additional amount towards taxes, hangar charges and the cost of equipment to be installed to make the aircraft air-worthy.

The order, uploaded on the high court website on Tuesday, was passed by judges B P Colabawalla and S C Dharmadhikari.

The high court has posted the matter for final disposal to September 13.

When contacted, a service tax department official, however, said a final decision will be taken by CBEC on whether to challenge the HC order or not. A final decision on whether to accept the bid or not is also pending, he maintained.

"We have reservations about the Rs 27 crore bid as this is much lower than our reserved price of Rs 152 crore or $22.5 million.

That position has been brought to notice of the Bombay HC," the official told PTI.

The department, which has over Rs 800 crore dues from Kingfisher Airlines, had attached the plane in December 2013.

Kingfisher Airlines has been grounded since October 2012.

The only bidder at the first auction was a UAE-based aviation support firm, Alna Aero Distributional Finance Holdings, which made an offer of Rs 1.09 crore for the jet.

After the failure of the first auction, the joint pricing committee comprising additional commissioner of the department and officials from the Directorate General of Central Excise Intelligence had decided not to lower the reserve level.

Mallya owes over Rs 9,000 crore (Rs 90 billion), which includes unpaid loans and accrued interest, to 17 banks.

Photograph: Danish Siddiqui/Reuters