Tax Dept asserts first claim to recover dues from Kingfisher

F1 team owner Vijay Mallya with driver Nico Hulkenberg

Asserting its primary claim, the Income Tax Department has maintained that dues to it will have to be settled first by Vijay Mallya-led Kingfisher Airlines, in the wake of a lender consortium of banks laying claim to “Kingfisher House" in Mumbai to recover part of their loans.

Kingfisher Airlines Limited had deducted tax at source from employee's salary and other payments for many years but failed to remit it to the government account following which it owes over Rs 350 crore as taxes, the Department said.

The Tax Department had attached all assets of KAL and is in the process of recovering its dues by sale and attachment of assets and properties of the defaulter company, it said.

Kingfisher House, located near the domestic terminal of the Mumbai Airport, is under attachment under the second schedule of the IT Act, 1961, the department said in a statement.

The Income Tax Department's claim that the amount due to the government will have “priority" over other debts comes two days after the Karnataka High Court rejected Kingfisher's plea challenging the move by a consortium of banks to take possession of its prime “Kingfisher House" property to realize part of the debts due to them from the airlines.

The court had said banks could take over the property as per law.

In its statement here, the Tax Department said it is a settled proposition of law that the amount due to the government under any statue and, in this case, under the provisions of Income Tax Act, 1961, will have priority over other debts.

As such, it said, the dues of Tax Department will have to be settled first before the lender consortium of banks can stake any claim to the property.