The Bombay High Court on Tuesday directed the Service Tax Department to carry out a revaluation of the luxury Airbus A319 of Vijay Mallya, chairman of the now-defunct Kingfisher Airlines. The court further said that the fresh exercise should be done after taking into consideration the ground realities regarding the condition of the Airbus.
The submissions came while the bench was hearing a plea filed by the Service Tax Department seeking to recall the e-auction of the aircraft, claiming that the highest bid in the auction were lower than the reserve price. The court said that the valuation report needs to be submitted in a sealed cover.
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“We have been informed that the bids received under the e-tender falls short of the reserve price and the same cannot be accepted. We therefore direct the Service Tax Department to submit a valuation report before the court by January 19. If such a report is given then the court will give further directions in the matter. But if the department fails to do so, we will pass orders and consider the request made by the Mumbai International Airport Limited (MIAL) to shift the airbus elsewhere,” said Justice S C Dharmadhikari.
The senior counsel appearing for MIAL told the High Court that the ‘luxury’ Airbus A319 “has turned into nothing better than scrap” and that it should be “sold off as scrap.” He further argued that no additional time should be granted to the department to look for a new buyer for the aircraft, and said that instead, CJ Leasings, the company that had leased the aircraft to Mallya should be asked if it was willing to buy it back in scrap.
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CJ Leasings said that the Department had been unable to attract a suitable bid because its reserve price for the aircraft, “$23.5 million,” was “absolutely unrealistic.” The department, meanwhile, sought three more months to dispose of the aircraft.