A special court for economic offences in Bengaluru has denied a request of the income tax department to issue a non-bailable warrant (NBW) against UB Group chairman Vijay Mallya in a case relating to non remittance of TDS (tax deducted at source).

The income tax department had moved court in 2013 seeking dues amounting to Rs.325 crore owed by the now grounded Kingfisher Airlines Ltd relating to three fiscal years-2009-12.

During the hearing on Wednesday, the legal team representing Kingfisher Airlines and Mallya said that the company had not paid salaries and there was no question of deducting TDS.

According to the annual reports of the airline, the company had paid Rs.688.8 crore in employee remuneration and benefits from April 2009 to March 2010, Rs.676 crore from April 2010 to March 2011 and Rs.669.5 crore from April 2011 to March 2012.

The legal team representing the income tax department will present more evidence which include auditor reports of the company.

The court has moved the matter to 20 April.

According to a Kingfisher Airlines employee, who did not want to be named, the last salary for airline employees paid was on July 2012.

“The airline is right in claiming that there is no question of TDS as salaries were not paid. But that was post July 2012. However, the airline had deducted TDS judiciously since 2010 from the salaries though it did not bother to pay the tax department,” he said.

A consortium of 17 banks led by State Bank of India has already moved Debt Recovery Tribunal and Karnataka high court seeking the arrest of Mallya, impounding his passport and disclosure of assets and liabilities. Mallya flew to an overseas destination on 2 March.

The Enforcement Directorate, on the other hand, is probing allegations of diversion of funds and other serious economic offences against Mallya and his company and issued a summons asking to him to personally appear before the investigative agency on 9 April.

The Service Tax Department has moved Bombay high court requesting that proceedings earlier initiated (on 11 March) against Mallya under the Code of Criminal Procedure be speeded up.

Employees, tax authorities, secured and unsecured creditors have trained their guns on Mallya and United Breweries Holdings Ltd (UBHL)—the holding company of Kingfisher Airlines—in the past two years to recover over $2 billion dues owed to them.