Jaypee Sports Seeks Refund of Deposit: SC says petition challenging Entertainment Tax Exemption to F1 Race not maintainable [Read Order]

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The Supreme Court said that the petition challenging entertainment tax exemption granted to Formula One Race is not maintainable.

The petitioner, Amit Kumar had challenged the exemption granted by the State of Uttar Pradesh to the Grand Prix event held in Buddh International Circuit along Yamuna Expressway in Gautam Buddh Nagar district of UP.

On October 21, 2011, a week before the race was scheduled, the Supreme Court had passed an order in the writ petition to direct the organizer of the event – Jaypee Sports International Ltd – to deposit the amount of entertainment tax payable by them.

In obedience to the Apex Court’s order Jaypee Sports deposited Rs.24 crores.

However, Jaypee Sports urged the bench to allow the refund of the deposit as the writ petition was not maintainable.

The Senior Advocate Arvind P Datar, appearing for Jaypee Sports said that since the Court is of the view that the writ petition is not maintainable, Jaypee Sports should be allowed to take back the amount deposited in 2011.

Advocate Prashant, appearing for the petitioner, submitted that the writ petition was filed because tax exemption was granted to a corporate entity that was close to the ruling government then. The counsel submitted that tax exemption for an ‘elite sport’ was not justified.

The Bench headed by Chief Justice of India, SA Bobde asked how can you challenge tax exemption under Article 32.

The Apex court said, “petition under Article 32 in the circumstances of this case might not be tenable. The learned counsel for the petitioner stated that the respondent who held the event of formula one racing has collected entertainment tax. The learned counsel further submitted that in these circumstances if the petition is dismissed as untenable, the respondent will be unjustly enriched. Shri Arvind P Datar, the senior advocate appearing for the respondent who held the Formula One race, states that the said respondent has not collected any amount towards entertainment tax from anyone for the event held in 2011 and 2012.”

The court further observed that the appropriate statutory authority under the UP Entertainment and Betting Tax Act will hold an enquiry and submit a report to this court whether the respondents have in fact collected entertainment duty in regard to the events in question. The said respondent will be at liberty to receive such evidence as appropriate for the purpose of enquiry before the said authority. Report being submitted in four weeks.

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