M A I N   N E W S

Kings owe Rs 5-cr tax, get notice
Chitleen K Sethi
Tribune News Service

Troubles galore n Bill just for matches played between April 2008-March 2009 n Service tax on matches in season 3 yet to be settled n A Rs 30-crore aid received by the franchisee from BCCI-IPL not reflected in the service tax returns filed by it. n Tax dept plans to send fresh remidner to the franchisee

Chandigarh, April 17
It’s raining troubles for the Kings XI Punjab in this IPL season. After a dismal performance of its team on the home turf — that has raised many eyebrows and left fans sulking — the Mohali franchisee is now reeling under tax problems.

The Central Excise Commissioner, Chandigarh, has slapped a show-cause notice on KPH Dream Cricket Pvt Ltd, the company owning Kings XI Punjab, for payment of nearly Rs 5 crore as service tax (interest and penalities extra) for matches it played in Mohali.

The company has Priety Zinta, Ness Wadia, Mohit Vivek Burman and Karan Paul as co-owners and the tax bill, say sources, is for matches played by the team from April 2008 to March 2009. The service tax due for the fresh season is yet to be computed and settled.

The notice, issued by the commissioner in February 2010, states that the company is liable to pay a service tax of Rs 3.9 crore on Rs 30 crore that it received as aid from the Board of Cricket Control of India-IPL for the business. The notice clearly states that the BCCI-IPL is a business entity and organising T-20 matches is a commercial activity.

The notice points out that the amount received by the company was not reflected in the service tax returns filed by it. A financial officer of the company, in a statement in October 2009, had acknowledged that the company had received the amount. The notice adds that the company is liable to pay another Rs one crore as service tax on Rs 8 crore paid by the company to foreign players.

According to the notice, another Rs 37 lakh was payable by the company on the gate receipts of Rs 4.7 crore. An amount of over Rs 9 lakh as service tax was due towards the company for commission/brokerage —- to the tune of nearly Rs 75 lakh —- paid by it to firms in Australia and Sri Lanka.

The notice further states that the company should explain why it should not be charged the due interest on the total amount and why penalties under various sections of the Finance Act 1994 be not imposed on it. The notice adds that the company should also explain why the sponsoring of “Kings XI Punjab” team should not be classifiable under the sponsorship services liable of service tax.

“The company was not required to pay the service tax on the services of sponsorship but the recipients of sponsorship services were required to discharge the service tax liability under reverse-charge basis,” points out the notice.

When contacted, Commissioner, Central Excise, Chandigarh-I, HK Thakur confirmed that the company owning Kings XI Punjab had been issued a show-cause notice. “The company was asked to reply within a month of receipt of the notice. However, there has been no reply from their side and we are issuing them a reminder,” he added.

Ness Wadia, co-owner of the team, and Arvinder Singh, the coordinator, could not be contacted despite repeated attempts.