The Service Tax Department said that "prima facie, it's a clear-cut case of tax evasion". According to these officials, the GMR Sports has committed "cheating" by not mentioning the service tax amount on the tickets.
It has come to light that the Indian Premier League (IPL) franchise Delhi Daredevils have been evading service tax during their home games at the Ferozeshah Kotla stadium. Authorities, on Tuesday, launched an investigation into the matter.
The GMR Sports Pvt Ltd, which owns DD, has been over-pricing the match tickets. The combined value of base price and entertainment tax, charged by GMR Sports, do not add up to the grand total mentioned on the tickets. The DD franchise owners levy a 14.5% service tax on the base price of the tickets, but do not mention the amount against the service tax column.
As a result, there are discrepancies in actual value of tickets and what the GMR Sports are charging from the cricket lovers by evading the service tax. And, this is evident on the tickets of Wednesday's match between DD and Gujarat Lions and those of previous two matches at the Kotla, which are in possession of dna.
The Service Tax Department said that "prima facie, it's a clear-cut case of tax evasion". According to these officials, the GMR Sports has committed "cheating" by not mentioning the service tax amount on the tickets.
An investigation has been launched by the Service Tax Department with principle commissioner Amita Suri looking into the matter. The Anti-Evasion Wing of the department, led by DP Sahariya, will conduct the preliminary inquiry.
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By Tuesday evening the department had started preparing a water-tight case against GMR by invoking certain clauses of the "1994 Finance Act".
On Tuesday, a senior official, who did not wish to be named, told dna, "They are charging 14.5% service tax on the base price, but they have not indicated the amount on the ticket. They should also mention the service tax registration number clearly. This is a serious issue."
"Let us assume that they are not charging the service tax, then how come there is a difference in the amount? If they are charging it, then why have they not mentioned the figure? This is cheating. They should tell the thousands of ticket holders what the difference in the amount is all about.
"On these tickets, they mention the entertainment tax but they have not mentioned the entertainment tax registration number."
Another official in the same department said that GMR Sports could argue that these are complimentary passes and need no service tax. He added that all the tickets, over and above Rs 500 denomination, be it complimentary or purchased, have to be charged service and entertainment tax.
"Whether these are complimentary passes or the actual tickets, they have to pay the service tax. They are charging a different amount than what is printed on the ticket, which clearly indicates tax evasion. The maturity date for service tax collection is May 5 for all the business entities in the capital.
"Even if GMR Sports deposits the amount on or before that date, then also a strong case would be made out of why the amount was not shown on the ticket," added the official.
When dna contacted GMR CEO Hemant Dua, he refused to speak on the issue stating that he is not handling the ticket pricing and said that the DD's media manager will comment on it.
A team spokesperson said, "We, as an organisation, are fully committed to comply with the law. There is no question of not paying any tax that may be due under the relevant laws. For complimentary passes, there is no consideration that is charged. The amounts mentioned on the complimentary passes are only notional values for the purpose of calculating Entertainment Tax.
"Further, we believe that no Service Tax is payable on these complimentary passes,".
IPL commissioner Rajiv Shukla refused to get involved in any of the franchises' tax-related issues. "Ticketing is GMR's own commercial activity. The IPL GC is not involved," said Shukla.
Justice Mukul Mudgal, who has been appointed by the Delhi High Court to oversee the conduct of matches post corruption issue, refused to comment. "I only deal with DDCA (Delhi and district cricket association) and not GMR in anyway. So, I don't want to offer any comments," he said.
A senior DDCA official said, "The matter is GMR's because all income — sponsorship, tickets, etc — goes to the franchise. Our responsibility is only to coordinate getting various approvals. We have rented out the stadium to them, that's all."
However, the offical said that if the GMR Sports is cheating on the ticket prices by evading the service tax, then the DD owners are also fooling the state cricket body by giving fewer tickets than what has been agreed between the two parties.
"As per the agreement, GMR gives 15 per cent of tickets to the DDCA for every IPL game. If they are committing this ticketing fraud, then they are saving a huge chunk of money. They are also fooling the DDCA by not disclosing this difference in amount to us. If you do the simple equation, then the ticket share of the DDCA should be increased," claimed the official.
Even the Entertainment Tax officials admitted that GMR and DDCA were indulging in tax evasion. Although they were getting the entertainment tax, the previous matter of non-payment of Rs 24.48 crore is pending in the Delhi High Court.
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