http://timesofindia.indiatimes.com/india/Why-exempt-F1-from-tax-SC-asks-Mayawati-govt/articleshow/10407919.cms
Why exempt F1 from tax, SC asks Mayawati govt
Dhananjay Mahapatra, TNN | Oct 19, 2011, 01.27AM IST
NEW DELHI: The Supreme Court on Tuesday asked the Mayawati government
why it granted entertainment tax exemption worth crores of rupees to
the Jaypee group, which is organizing India's first Formula 1 motor
race at the Buddh International circuit in Greater Noida on October
30.
A bench of Justices D K Jain and A R Dave entertained a PIL filed by
one Amit Kumar and sought the UP government's response in three days
while posting it for further hearing on Friday.
The petitioner termed the F1 race an "elitist and dangerous sport" and
argued that there was no public interest involved for the state to
exempt Jaypee Sports International Ltd, organizers of the F1 event,
from paying entertainment tax.
"Formula 1 racing is an elitist, exclusive and dangerous sport
reserved for the very rich and the elite of the society and did not
deserve waiving of entertainment tax," the petitioner's counsel Sanjiv
Sen argued.
"The waiver has been granted purely due to the fact that the private
respondent is close to the political leadership at the helm of power
in UP," the petitioner alleged and said the Madras High Court had
recently frowned upon grant of entertainment tax exemption to IPL T20
matches by the Tamil Nadu government and asked the tax department to
look into the issue.
The petitioner said entertainment tax collected from mega events like
F1 could go towards implementation of several welfare measures.
Advocate Sen said that the government, to give legitimacy to its
decision to exempt the organizers from paying entertainment tax,
floated a policy on May 22, 2009 citing economic downturn to encourage
developers, granting them incentives in fields like information
technology, sports, recreation and service industry.
Reacting to this, Sameer Gaur, JPSI MD, told TOI: "Tax exemption that
was given to us was part of the SEZ policy in Uttar Pradesh. All
entertainment events are exempt from taxes here in UP and F1 is an
entertainment event. We are definitely going to contest this."
According to the petitioner, Jaypee had on May 31 requested the state
government for relief from entertainment tax, luxury tax, electricity
duty, VAT, trade tax and sales tax for investing Rs 777.04 crore in
Special Development Zone along the Yamuna Expressway.
The Jaypee group had said the investments had sports as the core
activity as Rs 600.13 crore was spent for land acquisition and Rs
176.91 crore for construction of a F1 race track including its design
and engineering, cricket stadium, internal development and other
expenses.
The chief executive officer of Yamuna Expressway Industrial
Development Authority on June 7 referred the May 31 request to the
Mayawati government, which on June 27 granted exemption from
entertainment tax to Jaypee Sports International Ltd.
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