Crunch time

Calcutta, Jan. 16: Great Eastern Hotel faces closure with the income tax department seizing bank accounts following non-payment of dues amounting to Rs 2.09 crore.

The accounts of the state-owned hotel lying with Uco Bank and Central Bank of India were sealed by income tax officials who sent notices to these banks on Thursday. Though bank officials were tight-lipped, tourism department officials confirmed the matter.

Jagannath Bag, member secretary of the hotel, said, “I met the income tax authorities today to sort out the problem. The authorities told me to immediately pay up a portion of the dues. It is impossible for us to pay such a huge amount. We have a paltry sum of Rs 3 lakh in the bank. I will brief the principal secretary of the state tourism department on the matter.”

The local income tax authorities will not be able to lift the seizure notice. The hotel has to wait for instructions from the Union finance ministry.

However, tourism department officials are not surprised. They said the income tax officials had informed the hotel authorities a week ago that they would take coercive measures if the dues were not cleared. But the hotel authorities sat idle on the matter, they added.

The seizure of the bank accounts will stop the cash flow required to run the daily operations. The banks will not clear the cheques which the hotel will get against services.

Similarly, the cheques issued by the hotel will not be honoured by the banks. This means that the suppliers will not get their money. As a result, the suppliers will stop transaction with the hotel.

“We will not be able to pay the salaries of our employees due to this seizure. The operations at the hotel has come to a halt following the seizure of the bank accounts,” Bag added.

Over 150 years old, Great Eastern Hotel is as much a spectacular failure of the state government’s privatisation programme as it is a Calcutta landmark.

Since 1993, the government has tried to sell it thrice. However, the bids were rejected once and the bidders declined the invitation twice.

The latest speculation surrounded Prasoon Mukherjee, an entrepreneur from Djakarta, who was initially keen on taking up the hotel.

However, after a few visits to the hotel and extensive talks with the staff, he has reportedly decided against taking up the challenge.

Desperate to get rid of the non-performing asset, the government has again invited bids in December.