Central Board of Excise and Customs (CBEC) chief S K Goel on Sunday said that the ailing Kingfisher airlines had agreed to clear Rs.10 crore of its whopping Rs.76 crore service tax due, in service tax arrears which it has already collected from passengers, by end of this fiscal year.

Kingfisher Airlines
Kingfisher flight IT 3149 at an isolation bay of Chattrapati Shivaji airport in Mumbai May 20, 2010. REUTERS

The 7-years-old airline has been experiencing a severe debt-crisis over the corresponding period last year, following which the airlines has massively scaled down its operation and last week it had completely pulled down services to international routes.

The huge outstanding amount by the Kingfisher airlines promoted the service tax department to cancel bank accounts of Kingfisher. So far the department concerned has frozen as many as 40 accounts of the Kingfisher.

"However, the service tax department will de-freeze some of the airlines account to help the payment of remaining dues," said Goel.

"They have told us that they are going through a cash- crunch and needs some more time to pay up," PTI quoted Goel as saying.

"Kingfisher has dues to the tune of Rs 76 crore; we are talking to them. They will be depositing about Rs 10 crore this month," he added.

The DGCA has served a number of notices to the cash-strapped airlines that is now operating 16 out of 64 aircrafts, creating a mess in the aviation sector.

The Aviation Ministry and the DGCA has dashed off a strong warning saying that it would cancel the licence of the Kingfisher airlines, in case it fails to come out with a new operational schedule by next week.

Meanwhile, commenting on the penal action against the unfortunate Kingfisher airlines, which the department threatened early this week, Goel said that according to a legal provision, a defaulter could take up to 12 months to pay the dues. However, violating the deadline will promote the department to restore to other legal options.

Kingfisher went on a flight cancelation spree after the airlines incurred a thumping Rs.6, 000 crore of loss.

Meanwhile, pilots quitting the jobs or boycotting the duties over the non-payment of salaries pushed the airlines along with passengers into an unholy mess.