The business model and various types of contracts signed under the Indian Premier League, the new cricket venture, have come under the lens of the Service Tax Department. Under IPL, eight privately owned teams from different cities, with a mix of foreign and local stars (chosen through the auction route), are playing Twenty20, a short format of the game lasting 3-4 hours. Official sources said that the Director-General of Service Tax in Mumbai has shot off a letter to field formations asking them to collect information about the contracts entered into by sponsors, team owners, franchisees, advertisers etc. “The exercise is at a very preliminary stage. Only information has been sought. The department is getting hold of the various contracts to examine whether any of the activities would attract service tax or not. It is yet to be ascertained if service tax will apply or not,” sources added. It was pointed out that the issue of sending notices does not arise at this stage. Although services in relation to sports events do not come under the ambit of sponsorship services, the issue of sponsoring a cricket team may attract attention of the department. Currently, over 100 services are under the service tax net. The Centre’s service tax revenues have seen a steady climb over the last decade on the back of increased share of services in the overall gross domestic product of the country |
