Mumbai's service tax department froze several accounts of cash-strapped Air India and Kingfisher on Thursday, as both airlines owed it crores of rupees which was collected from passengers but not paid to the exchequer. This is the second time in less than a month that Kingfisher has had its accounts blocked for non-payment of service tax dues.

AI owes the department Rs 150 crore, while Kingfisher has to pay up Rs 70 crore.

"We have frozen 11 accounts of AI and 10 of Kingfisher for defaulting on service tax payments over the past five days," agency reports quoted S K Solanki, commissioner of service tax (zone 1, Mumbai commissionerate ) of the Central Board of Excise and Customs, as saying. Solanki said the two airlines have defaulted on payment though they had collected service tax from their customers.

The action was taken after the airlines failed to clear the dues in "sufficient time" given to them. While Kingfisher had to pay for April-September period , AI has to cough up dues for April-August . Solanki pointed out that Kingfisher's accounts were frozen for two days in November too and the order was reversed only after the airline promised to deposit the dues in three instalments.

S K Solanki, commissioner of service tax (zone 1, Mumbai commissionerate) of the Central Board of Excise and Customs pointed out that Kingfisher's accounts were frozen for two days in November too and the order was reversed after the airline promised to deposit the dues in three instalments.

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