Even as the Maharashtra government remains undecided on levying entertainment tax on IPL, a report of the Comptroller and Auditor General (CAG) of India has revealed that the State lost Rs. 4.99 crores by way of tax in 2008.
The CAG report for the year ended March 31, 2009, was tabled in the State Assembly on Friday. The report says the Indian Premier League (IPL) organised a T-20 cricket tournament in April and May 2008 in which 10 matches were played in Mumbai, six in Wankhede stadium and four in D.Y. Patil stadium, Navi Mumbai. M/s. India Win Sports (Pvt.) Ltd., Mumbai was entrusted with the work of sale of tickets for these matches. However, no entertainment tax was levied on the admission fee to these IPL matches, the report noted.
The report states that the IPL matches were of a purely commercial nature and the franchisee owners of the eight teams comprising business tycoons and film stars spent crores of rupees to buy the teams and players from all cricket playing nations .
It is obvious that the main objective of IPL was to provide entertainment and hence merited the levy of entertainment duty on the sale of tickets. It is also pertinent to mention that the Delhi government has treated the IPL as a commercial venture and has accordingly decided to impose tax on the sale of tickets, the report pointed out.
Seeks report on ticket rates
The CAG called for information regarding the rates of tickets and the number of tickets sold for different matches from the State government to estimate the amount of entertainment tax which was forgone. The government did not furnish information regarding the number of tickets sold and the aggregate amount of admission fees collected for these matches. The government called for this information from the franchisee, but the franchisee did not make the information available stating that these cricket matches were exempted from payment of entertainment tax.
On the basis of information in respect of seating capacity of the stadiums, collected independently by audit and considering the minimum rate of admission fee of Rs.500 ( as against the range from Rs.500 to Rs.10,000), the amount of tax forgone is calculated at Rs.4.99 crore.
The CAG has recommended that since IPL matches are purely commercial in nature having considerable revenue potential, the government may consider the levying entertainment tax on the sale of tickets for IPL matches. Moreover, legislative sanction needs to be obtained, if at all exemptions are to be given to such type of commercial activities and blanket exemptions should not be granted merely on the basis of a Government Resolution (GR) which was issued much before the IPL was visualized.
The report refers to the GR issued in May 1964, in which all sports meetings (excluding race meetings) are exempted from payment of entertainment tax. Accordingly, cricket matches held in the State are exempted from the payment of entertainment duty.