Service tax dept begins e-auction for Mallya's luxury jet

The final list of bidders would be finalised only after the interested firms pay the earnest money deposit on June 30.

The service tax department is in the process of auctioning beleaguered industrialist Vijay Mallya’s luxury jet Airbus 319, in Mumbai, in a bid to recover part of the Rs 800-crore (Rs 8 billion) service tax due from the now defunct Kingfisher Airlines.

“There are four foreign companies that have registered for the bid process of which one UAE-based company has been qualified so far,” said a senior officer of the department.

Another UK-based contender is also partially qualified but the money deposited is yet to be credited.

However, the final list of bidders would be finalised only after the interested firms pay the earnest money deposit on June 30, said the official.

The e-auction is being conducted by Metal Strap Trading Corporation, which is a government-owned company engaged in domestic and international trading activity.

The service tax department hopes to raise Rs 150-200 crore (Rs 1.5-2 billion) from the auction, said sources.

The reserve price is not disclosed by the department, as it was decided by a special committee dealing with the auction process.

The service tax authority had seized at least eight aircraft owned by Kingfisher Airlines and Mallya.

The aircraft under the hammer is owned by C J Leasing (Cayman) Ltd and was given on lease to Kingfisher.

Last year, Mumbai International Airport Pvt Ltd (MIAL) had sold an 11-seater plane to Silent Enterprises for Rs 22 lakh which later dismantled the aircraft to sell the scrap.

According to the department's application in the Bombay High Court last year, Mallya owes Rs 32.68 crore (Rs 326.8 million) as service tax collected from tickets sold to passengers of Kingfisher Airlines.

This is the admitted liability of the now-defunct airline. The total unpaid dues of the department stand at about Rs 800 crore.

The court had observed earlier that there was no legal trouble in auctioning the aircraft and permitted the auction.

Mallya, reportedly in exile in the UK, owes Rs 6,963 crore (Rs 69.63 billion) to a consortium of bankers led by the State Bank of India, for loans taken to run Kingfisher Airlines.

The banks say Mallya had provided personal guarantees, apart from pledging his stake in UB Group companies, to raise funds for the airline.