2016 (5) TMI 192 - HC - Service Tax

IPL Ticket Tax Dispute: Legislative Competence, Service Tax Liability, & Free Tickets Agreement

GMR Sports Private Limited Versus Union of India & Others

The court addressed the challenge to the levy of Service Tax on IPL tickets, legislative competence regarding the imposition of service tax and ... Seeking grant of ad-interim ex parte relief - Levy of Service Tax - Sale of tickets for the Indian Premium League (IPL) Cricket Tournament - Petitioner contended that it is in any event paying tax on entertainment, within the exclusive domain of the State as per List II of the 7th Schedule to the Constitution so, 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. Also in terms of the Agreement entered into between the petitioner and the BCCI there is an obligation on the petitioner to provide BCCI 20% free tickets in every category so it should not be made liable to pay Service Tax on such ‘free tickets’. Held that:- as far as the second submission is concerned, it will require examination of the Agreement between the petitioner and the BCCI in some detail. It is found that for the current IPL season, the petitioner has already collected the Service Tax on the tickets sold. Having collected the Service Tax in terms of the amendments in the Finance Act, 1994, there is an obligation on the petitioner to deposit such Service Tax with the Central Government. Therefore, 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. - application is disposed of. Issues:1. Challenge to the levy of Service Tax on the sale of tickets for the Indian Premium League (IPL) Cricket Tournament.2. Legislative competence regarding the imposition of service tax and entertainment tax on the same taxable event.3. Liability to pay Service Tax on free tickets provided as per agreement with the Board of Control for Cricket in India (BCCI).Issue 1: Challenge to the levy of Service Tax on IPL tickets:The petitioner challenged the levy of Service Tax on IPL tickets based on amendments to the Finance Act, 1994, effective from 1st June, 2015. The argument was centered on the legislative competence, contending that tax on entertainment, which the petitioner was already paying, fell under the exclusive domain of the State as per List II of the 7th Schedule to the Constitution. It was argued that the simultaneous imposition of service tax by the Union and entertainment tax by the State on the same taxable event raised concerns about legislative competence.Issue 2: Legislative competence regarding the imposition of service tax and entertainment tax:The petitioner argued that the imposition of both service tax and entertainment tax on the sale of IPL tickets raised questions of legislative competence. Reference was made to the Delhi Entertainments and Betting Tax Act, 1996, which included 'games, sport, or race' under the definition of 'entertainment.' The petitioner contended that the collection of entertainment tax was within the State's domain, and the imposition of service tax by the Union on the same event could lead to overlapping taxation.Issue 3: Liability to pay Service Tax on free tickets provided under agreement with BCCI:The petitioner highlighted an agreement with the BCCI, which obligated them to provide 20% free tickets in every category. The contention was that the petitioner should not be liable to pay Service Tax on these free tickets. However, the court noted that for the current IPL season, the petitioner had already collected Service Tax on the tickets sold. The court directed that the Service Tax collected and deposited by the petitioner during the pendency of the writ petition would be subject to the final outcome of the case, indicating an interim resolution while reserving the parties' rights and contentions for the final hearing.In summary, the judgment addressed the challenge to the levy of Service Tax on IPL tickets, the legislative competence regarding the imposition of service tax and entertainment tax on the same taxable event, and the liability to pay Service Tax on free tickets provided under an agreement with the BCCI. The court considered the arguments presented, focusing on legislative competence and the obligations arising from the agreements between the parties. The interim order directed the treatment of Service Tax collected during the pendency of the case, pending the final outcome of the petition.