The Indian airline SpiceJet has disclosed non-payment of nearly Rs 220 crore in tax deducted at source (TDS) from employees’ salaries between April 2020 and August 2023. The company has revealed that it owes around Rs 135.3 crore in provident fund (PF) payments to its employees, in a preliminary placement document (PPD) filed on September 17 with the Bombay stock exchange (BSE).
Moreover, the company, which is financially struggling has revealed that it has dues in customs, service tax, and goods and services tax (GST) as “disputed”.
“Owing to our constrained financial position, we have delayed in depositing payment of the statutory dues,” said the company in PPD.
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What are the financial and legal issues the company is battling?
The disclosure by the airline comes around the time when it is trying to fix its financial health. Additionally, on September 16, the airline opened qualified institutional placement (QIP) to raise nearly Rs 3,000 crore at a floor price of Rs 64.79 per share, the company said in the statement.
The funds raised are likely to be used to expand operations. The proceeds will also be utilised in paying off Rs 601.5 crore in overdue taxes and contributions, such as TDS, PF, and GST. Nearly, Rs 750 crore will be used to pay off debts to the creditors, including aircraft and engine lessors, engineering vendors, and financiers.
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Apart from the financial struggles, the company is also battling legal cases with lessors and other vendors. The company in the filing on BSE mentioned nearly 25 pending litigations, including defaults under aircraft lease agreements.
“Owing to our financial stress, we have been in alleged default under several of our aircraft lease agreements, leading to the grounding of a substantial part of our fleet,” said the company in its statement.
Additionally, it revealed that such alleged defaults have also led our aircraft lessors and other vendors to initiate legal or enforcement proceedings against us, including proceedings under the Insolvency and Bankruptcy Code, 2016, enforce bank guarantees, appropriate security deposits or repossess our aircraft, which has and may in the future adversely affect our business, financial condition and results of operations.
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