DGCA & DRI investigating corporates for customs evasion while using foreign-registered aircraft
December, 27th 2011
Flying around in private planes registered overseas may be convenient and perhaps even fashionable in India Inc, but the country's aviation regulator and premier tax investigating agency are determined to force a crash-landing to possible misuses in this growing corporate fad.
The Directorate General of Civil Aviation and Directorate of Revenue Intelligence (DRI) are investigating whether corporate groups and tycoons regularly using such foreign-registered aircraft within the country have complied with Customs rules applicable on the use of such planes, both in letter and spirit.
These rules bar foreign-registered aircraft from being kept in the country for more than six months, lest they attract import duties.
But the authorities say many of these planes are predominantly used in India, flown out to neighbouring countries before the six-month period and brought back again for use in India, avoiding paying Customs duty in the process.
"The DGCA had raised this issue... The DRI looked into the matter and has now initiated an investigation," said an official with the aviation regulator. A Customs department official confirmed that the DRI had initiated a formal investigation.
The DRI recently issued a show-cause notice to Bharat Hotels, owners of Lalit hotels, as part of its investigation into the use of foreign-registered aircraft within the country, a move that culminated in the company choosing to settle with the Customs authorities by paying .`21 crore as duty in cash and bank guarantees.
The company did not respond to ET's queries despite numerous reminders. The agency, which started looking into the issue after the DGCA wrote to the finance and civil aviation ministries in April this year about possible abuse of laws in the use of such aircraft, is working with a list that contains around a dozen corporate names.
This list, prepared by the aviation regulator, also details the type of aircraft and their usage patterns. The DGCA had been keeping a close watch on flight schedules and movements of many such aircraft. Many of the industrial groups named in the list told ET that they were in full compliance with the rules.