Service Tax on IPL; Delhi HC asks GMR Sports to continue deposit Service Tax till final order [DOWNLOAD ORDER]

A Delhi High Court bench comprising of Justice S Muralidhar and Justice Vibhu Bakhru refused to give interim relief of Service Tax on sporting events like the IPL. The levy of Service Tax on the sale of tickets for the indian premier league (IPL) Cricket Tournament, by virtue of the amendments to the Finance Act, 1994 by the 2015 with effect from 1 st June, 2015 together with the Service Tax Notification No.06/2015 dated 1st March, 2015 and the Circular No. 334/5/2015-TRU dated 28th February, 2015.

GMR Sports, the owner of the Delhi Daredevils franchisee in the Indian Premier League (IPL), has challenged in the Delhi High Court the 2015 Budget announcement of service tax on IPL.

The petitioners contended that, the earlier negative list setting out items in respect of which Service Tax was not leviable was included ‘entertainment’ which in terms of Section 10(j) (now omitted) included sporting events. It is further pointed out that under Section 2(i) of the Delhi Entertainments and Betting Tax Act, 1996 the expression 'entertainment' includes ‘games, sport or race’. It is, therefore, contended that tax on entertainment, which the Petitioner is in any event paying, is within the exclusive domain of the State as per List II of the 7th Schedule to the Constitution. In respect of the same taxable event viz., there cannot be a levy of service tax by the Union on the sale of tickets and a levy of entertainment tax by the State.

The Court observed that, “it will require examination of the Agreement between the Petitioner and the BCCI in some detail. However, the Court finds that for the current IPL season, the Petitioner has already collected the Service Tax on the tickets sold. A sample of the tickets sold at is at Annexure-P-8 of the present petition. Having collected the Service Tax in terms of the impugned amendments in the Finance Act, 1994, there is an obligation on the Petitioner to deposit such Service Tax with the Central Government”.

“In the circumstances, the Court is of the view that the only interim order that can be passed at this stage, while reserving the rights and contentions of both the parties at the final hearing of the writ petition, is to direct that the Service Tax as collected and deposited by the Petitioner during the pendency of the present writ petition will be subject to the final outcome of the petition”, Delhi High Court said in the order.

Read the full text of the order here.

[googleapps domain="drive" dir="file/d/0B3j3oXdY53gVNnZOb0JHT2o5NzA/preview" query="" width="640" height="480" /]