The Supreme Court today asked Jaypee Sports International Ltd, organiser of the F1 race in Greater Noida, to deposit 25 per cent of the money collected through the sale of tickets in a separate account, within two weeks of the event.
The order was passed on a petition moved by an individual challenging the exemption granted to the company from entertainment tax by the state government.
The bench, headed by justice D K Jain, did not deliberate on the legal questions, and these would be decided later. Both the Uttar Pradesh government and the company have been asked to file their replies to the petition.
The company counsel, Mukul Rohtagi, said the company had already invested Rs 2,000 crore in the project for the development of the whole area, including the sports complex.
Holding an international event like this is prestigious for the country, and the there has been a good response from all over the world for the event. Hotel rates in Delhi have gone up three times, while customs and other revenue for the government are immense, the counsel added.
The petition was filed on the eve of the race, while the decision to hold it was taken in June.
Counsel for the petitioner, Amit Kumar, argued the state government had no power to exempt the company from entertainment tax. When the judges asked him to prove how the company was legally prevented from being granted an exemption, the petitioner could not give a satisfactory answer. The judges said the petition was "half-baked" and needed more documental support. The petition had also challenged the policy of the government in granting exemption to the company.
According to the petition, the exemption was granted due to political influence. Considering the fact that F1 racing is an elitist and a dangerous sport, there was no justification for the state government to grant exemption of entertainment tax. F1 racing had no connection with the general populace, and catered to the tastes of the rich and the social and financial elite, he alleged.
