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Our Bureau

Mumbai, July 2 The Bombay High Court has, yet again, adjourned the tax liability dispute case between Jet Airways and Sahara India Commercial Corporation to July 15.

The Court drove home the point that the parties should sit across the table and discuss the matter. Though no directions were given to this effect, it added, “Let this be the last adjournment now.”

At the last hearing, both parties had requested for more time as they were open to discussing an out-of-court settlement. However, on Thursday, the Court was told that there had been no progress in the matter though efforts to resolve the issue were still on.

“We have made certain overtures to them (Sahara) but… (things haven’t moved after that). We are still open to discussions,” Jet’s counsel said. On the other hand, Sahara’s counsel told the Court, “After June 16, no approach has been made (by Jet). Not a single call or anything has happened.” To this, Jet’s counsel said that the “parties have not met face to face and intermediaries are talking to each other”.

Meanwhile, Jet’s counsel also told the Court that it had received a copy of an order passed in its favour by the Income Tax Tribunal, on Wednesday, relating to the income tax liability of Rs 440 crore assessed for 2004-2005.

Consequently, the tax liability undisclosed by Sahara at the time of its takeover was down to Rs 380 crore “for the time being”. However, he added that if the Income Tax department appealed against the order in the High Court, there were chances of it going back to Rs 821 crore. Jet will submit an affidavit to this effect on Monday while Sahara will submit its reply in a week, said its counsel.

The tax liability dispute between the two started in March this year when Sahara claimed that Jet had defaulted on its payment commitment. The latter maintained that it deducted Rs 87.50 crore from the two instalments after a tax demand was raised by the IT department which was for the period prior to the takeover.

In the course of successive Court hearings, Jet claimed that there was an IT demand of Rs 1,032 crore on JetLite which Jet is now liable to pay. Of this, Rs 908 crore was undisclosed and hence, not factored in the valuations when it acquired JetLite for Rs 1,450 crore. The Rs 87.50 crore deduction was made on the grounds that as per the share purchase agreement, any tax liability arising in excess of Rs 50 crore would have to be reimbursed by Sahara.

Jet is now seeking reimbursement of the balance Rs 821 crore while defending its decision to deduct a part of the IT dues from the instalments.

Sahara, on the other hand, has accused Jet of breaching a clause of the agreement which stipulated that it had to pay the four instalments in full “without any setoff or deduction”. As a result, Sahara argues, the negotiated price of Rs 1,450 crore would be revoked and Jet would have to pay the originally agreed Rs 2,000 crore.

More Stories on : Airlines | Corporate Disputes | Taxation | Courts/Legal Issues | Jet Airways (India) Ltd

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