After ‘losing’ Rs500 crore in IPL, Maharahtra wakes up

Chief minister Ashok Chavan on Friday indicated that the Indian Premier League (IPL) matches would be brought under the entertainment tax regime from next month.

This means  the ongoing matches will be exempted. In the process, the state will give up over Rs500 crore revenue that it could have earned through sale of tickets and event management.

This came on the day when the comptroller and auditor general (CAG) also slammed the state government for giving up Rs4.99 crore due to non-levying of entertainment tax on IPL in 2008. A CAG report on revenue receipts of Maharashtra was made public on Friday.

The report had suggested that the state government consider levying entertainment tax on “commercialised sports activities” such as IPL matches that have considerable revenue generating potential.

“The IPL matches were of a purely commercial nature. The franchisee owners of the eight teams comprising business tycoons and filmstars spent crores of rupees to buy the teams and players from all cricket playing nations for the world’s richest tournament. The IPL was conceptualised as an entertainment spectacle and was also pitched as the ultimate destination of TV entertainment. It is obvious that the main objective of IPL was to provide entertainment and hence merited levying of tax on sale of tickets,” the report stated.

It said the Delhi government treated IPL as a commercial venture and accordingly imposed tax.

Earlier, at the cabinet meeting in Mumbai on Friday, the Congress and the Nationalist Congress Party (NCP) were engaged in an intense battle over levying taxes on the matches.

Sensing the NCP’s mood, which was against the tax, Chavan agreed to impose entertainment tax on IPL from May.

A source close to the chief minister said: “The government wants to play it safe since the issue is pending in the Bombay high court. The court’s verdict will decide whether the tax should be imposed with retrospective effect or in the next season.”

Chavan, who has already irked the alliance partners by his refusal to extend the night deadline for IPL matches from 10pm to 11.45pm, did not want to corner them on taxes.

A senior cabinet minister said, “We fear that if we harden our stand, the IPL may shift its venue to another state in the future. There was a lot of pressure from the industry to have some flexibility on the taxes. But we hope the court intervenes and gives a ruling which will be acceptable to all parties.”

The CAG report had said information on rates of IPL tickets and number of tickets sold for different matches was not provided even after repeated prodding. CAG wanted the information to calculate the amount of tax that the government had ignored. The franchisees refused to provide information, saying IPL matches were exempted from tax payment.

“On the basis of information with respect to seating capacity of the stadiums collected independently by audit and considering the minimum rate of admission fee or Rs500 [as against the range from Rs500 to 10,000], amount of tax forgone is calculated at Rs4.99 crore,” the report said.

As per a government resolution issued in May 1964, all sports activities, excluding races, are exempted from tax. Accordingly, cricket matches held in various stadiums of the state are also exempted. The IPL organised a T20 cricket tournament in April and May 2008 in which six matches were played at Wankhede stadium in Mumbai and four at DY Patil stadium in Navi Mumbai.

The buzz is that the CAG may also be roped in to get to the bottom of the IPL controversy. But, there’s no official confirmation as yet.

On the sidelines of a press conference in New Delhi, deputy CAG AK Banerjee told DNA that no reference had come from the government so far on the IPL issue.

The CAG reports on the revenue department of the finance ministry that were tabled in parliament on Friday, were silent on tax collection or non-collection from the Board of Control for Cricket in India (BCCI) and IPL. BCCI enjoyed tax exemption, till it was withdrawn in November 2009 by the government. The CAG report is for a period of one year till March 31, 2009.