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A multi-crore entertainment tax exemption granted by the Uttar Pradesh Government to the Jaypee Group for the Formula-1 racing event was questioned by the Supreme Court on Tuesday.
A PIL filed by a UP resident Amit Kumar had raised objection over the State Government’s decision to waive off the entertainment tax — which runs into several crores of rupees — payable by the organisers of the event, Jaypee Sports International Limited.
Seeing no prima facie justification to provide the exemption, the bench of Justices DK Jain and AR Dave issued notice to the UP Government, Jaypee group and the Yamuna Expressway Industrial Development Authority to respond by Friday.
The court saw the urgency to entertain the petition filed by advocate Prashant Kumar as the event is scheduled to be held on October 30. For the petitioner, advocate Sanjib Sen argued that the exemption was purely to favour the organiser known to be close to the UP Government led by Chief Minister Mayawati.
The petition termed the F-1 event as an “exclusivist and elitist” sport to which only the rich can afford to go as each ticket ranges between Rs 2,500 to Rs 35,000. It further pointed out that the State granted the exemption under Section 11(1) of the UP Entertainment and Betting Tax Act 1979. This provision allows waiver of tax solely on ground of public interest.
When the court was informed that the policy brought forth by the UP Government was much later after the investment was brought in by Jaypee group, the bench had reason to doubt whether the State was “hand in glove” with the organisers.
Even the manner and pace at which the decision was taken at the top level of the State Government raised suspicion. Jaypee had invested a total of over Rs 777 crores during 2009-10, of which Rs 176.91 crore was incurred to construct the Formula-1 racing track spread across an area of 351 hectares.
On May 31 this year, Jaypee sought an exemption from payment of entertainment tax under the Act. Within 10 days, the Chief Secretary directed Principal Secretary (Taxes) to grant all exemptions/relaxations regarding entertainment tax, luxury tax, VAT, Trade tax, Sales tax, and electricity duty tax in favour of Jaypee. In the same month, the Commissioner of Entertainment Tax suggested that the said exemption could be granted under Section 11(1) of the UP Entertainment and Betting Tax Act. Finally on June 27, the exemption was granted.
Questioning the haste on part of the State agency, the petition referred to an earlier court direction ordering tax to be levied on IPL cricket event. It demanded the same yardstick to be applied in the present case as the organisers were charging exorbitant rates from public ringing in profits for the private company at the cost of the exchequer.
A PIL filed by a UP resident Amit Kumar had raised objection over the State Government’s decision to waive off the entertainment tax — which runs into several crores of rupees — payable by the organisers of the event, Jaypee Sports International Limited.
Seeing no prima facie justification to provide the exemption, the bench of Justices DK Jain and AR Dave issued notice to the UP Government, Jaypee group and the Yamuna Expressway Industrial Development Authority to respond by Friday.
The court saw the urgency to entertain the petition filed by advocate Prashant Kumar as the event is scheduled to be held on October 30. For the petitioner, advocate Sanjib Sen argued that the exemption was purely to favour the organiser known to be close to the UP Government led by Chief Minister Mayawati.
The petition termed the F-1 event as an “exclusivist and elitist” sport to which only the rich can afford to go as each ticket ranges between Rs 2,500 to Rs 35,000. It further pointed out that the State granted the exemption under Section 11(1) of the UP Entertainment and Betting Tax Act 1979. This provision allows waiver of tax solely on ground of public interest.
When the court was informed that the policy brought forth by the UP Government was much later after the investment was brought in by Jaypee group, the bench had reason to doubt whether the State was “hand in glove” with the organisers.
Even the manner and pace at which the decision was taken at the top level of the State Government raised suspicion. Jaypee had invested a total of over Rs 777 crores during 2009-10, of which Rs 176.91 crore was incurred to construct the Formula-1 racing track spread across an area of 351 hectares.
On May 31 this year, Jaypee sought an exemption from payment of entertainment tax under the Act. Within 10 days, the Chief Secretary directed Principal Secretary (Taxes) to grant all exemptions/relaxations regarding entertainment tax, luxury tax, VAT, Trade tax, Sales tax, and electricity duty tax in favour of Jaypee. In the same month, the Commissioner of Entertainment Tax suggested that the said exemption could be granted under Section 11(1) of the UP Entertainment and Betting Tax Act. Finally on June 27, the exemption was granted.
Questioning the haste on part of the State agency, the petition referred to an earlier court direction ordering tax to be levied on IPL cricket event. It demanded the same yardstick to be applied in the present case as the organisers were charging exorbitant rates from public ringing in profits for the private company at the cost of the exchequer.
