Jet, Sahara spar over Rs200 cr tax liability

Mumbai: The Jet-Sahara saga that seemingly ended with Naresh Goyal’s Jet Airways (India) Ltd buying Air Sahara from Subrata Roy’s Sahara India Pariwar last April, after a year of legal manoeuvring, is far from over.
In the latest round of troubles to plague the acquisition, the income-tax department has demanded about Rs200 crore from Jet Airways in taxes on the acquisition of Sahara Airlines Ltd, the company that owned Air Sahara, which has since been rebranded JetLite.
It is not clear whether this tax liability is by way of capital gains tax or service tax or both. But, arguing that it is Sahara’s liability, Jet Airways has deducted Rs37.08 crore from its first instalment that fell due in March this year to Sahara India Commercial Corp. Ltd as part of the April 2007 transaction. This amount was paid to the income-tax department on 24 March, a person close to the situation said, on the condition of anonymity.
According to its buyout agreement with Sahara Group on 17 April 2007, Jet had agreed to pay Rs550 crore in four equal instalments commencing March 2008 and ending March 2011. As per this, Jet Airways was supposed to pay Rs137.50 crore in March.
Mumbai-based Jet Airways had bought 100% shares of Sahara Airlines Ltd for Rs1,450 crore, of which Rs900 crore has already been paid to Sahara by 20 April last year.
Sahara says there is no provision for treating a tax liability in the share purchase agreement
When asked about the inco-me-tax department’s action, Jet Airways executive director Saroj K. Datta confirmed it to Mint on 3 April, but declined further detail. On 17 April, Go-yal insisted the liability “would be paid by Sahara, not Jet”.
Sahara India Financial Corp. executive director Pallav K. Agarwal said he would not comment on the matter.
25/04/08 P.R. Sanjai/Livemint

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Categories: Jet Airways Apr 2008, Jetlite Apr 2008