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Striking down the Uttar Pradesh government’s decision to waive off entertainment tax to the Jaypee Sports International Limited for the Formula I racing event, the Supreme Court on Friday directed payment to be deposited in a separate bank account within two weeks of the event.
The payment expected to be 25 per cent of the total earnings received by the organizer could ring in close to Rs 20 crore into the state coffers as the company has claimed that its earning from ticket sale could roughly touch Rs 75 to 80 crore. The account containing the tax amount will not be dealt by any party, the bench said.
The need for the Court to step in, with just a week to go for the event scheduled on October 30, was the decision of the state government to waive off entertainment tax payable by the organiser under Section 11(1) of the UP Entertainment and Betting Tax Act 1979.
On Friday before the Court, both the state and organiser went far to defend the exemption making the Court wonder why the state was so interested to give up on the cash bonanza. The bench of Justices DK Jain and AR Dave even exclaimed, “We want to get money for the state and you are not interested.”
It was only later the Court realised the state’s anxiety when the UP counsel and senior advocate Gopal Subramanium pointed out that the June 2009 policy under which Jaypee had applied for constructing the racing circuit itself contained a clause for exempting entertainment tax.
This was enough for Jaypee group counsel and senior advocate Mukul Rohatgi to show displeasure over the petitioner approaching Court at the last minute having known throughout that the concession was available.
Already an investment of Rs 2000 crore had gone into development of the 351 hectare sporting infrastructure consisting of racing track, sports academy and related infrastructure. He further suggested that the Court’s intervention may prove a “dampener” on the event to be witnessed across the world.
Not amused by this stand of the company, the bench enquired, “How can our order be a dampener or how will it create adverse publicity? We fail to understand that we have only directed you to set apart 25 per cent amount after the event finishes.”
Giving its reasoning for passing such an order, the Court explained, “Development for sports must be seen with the policy that it entailed. For instance if the policy was to develop it for group housing society for middle income or poorer sections of the population, then the definition of sports has to be considered in that context and not in isolation.”
The State Government expressed an apprehension that the petitioner Amit Kumar, a resident of the state, had raised objection over land being earmarked for racing event. The bench said, “We are not considering whether racing is a sport.” However, the judges abundantly made clear their doubt whether constructing an racing track was at all the intention of the allotment policy that may be determined from the initial allotment made. In this regard, the Court granted four weeks to the state and Jaypee to file their responses and fixed the matter after two months.
The payment expected to be 25 per cent of the total earnings received by the organizer could ring in close to Rs 20 crore into the state coffers as the company has claimed that its earning from ticket sale could roughly touch Rs 75 to 80 crore. The account containing the tax amount will not be dealt by any party, the bench said.
The need for the Court to step in, with just a week to go for the event scheduled on October 30, was the decision of the state government to waive off entertainment tax payable by the organiser under Section 11(1) of the UP Entertainment and Betting Tax Act 1979.
On Friday before the Court, both the state and organiser went far to defend the exemption making the Court wonder why the state was so interested to give up on the cash bonanza. The bench of Justices DK Jain and AR Dave even exclaimed, “We want to get money for the state and you are not interested.”
It was only later the Court realised the state’s anxiety when the UP counsel and senior advocate Gopal Subramanium pointed out that the June 2009 policy under which Jaypee had applied for constructing the racing circuit itself contained a clause for exempting entertainment tax.
This was enough for Jaypee group counsel and senior advocate Mukul Rohatgi to show displeasure over the petitioner approaching Court at the last minute having known throughout that the concession was available.
Already an investment of Rs 2000 crore had gone into development of the 351 hectare sporting infrastructure consisting of racing track, sports academy and related infrastructure. He further suggested that the Court’s intervention may prove a “dampener” on the event to be witnessed across the world.
Not amused by this stand of the company, the bench enquired, “How can our order be a dampener or how will it create adverse publicity? We fail to understand that we have only directed you to set apart 25 per cent amount after the event finishes.”
Giving its reasoning for passing such an order, the Court explained, “Development for sports must be seen with the policy that it entailed. For instance if the policy was to develop it for group housing society for middle income or poorer sections of the population, then the definition of sports has to be considered in that context and not in isolation.”
The State Government expressed an apprehension that the petitioner Amit Kumar, a resident of the state, had raised objection over land being earmarked for racing event. The bench said, “We are not considering whether racing is a sport.” However, the judges abundantly made clear their doubt whether constructing an racing track was at all the intention of the allotment policy that may be determined from the initial allotment made. In this regard, the Court granted four weeks to the state and Jaypee to file their responses and fixed the matter after two months.
