The Supreme Court on Friday asked the organiser of the Formula 1 (F1) Grand Prix of India – a Jaypee Group company – to deposit 25 per cent of the sales proceeds from tickets for the event in a separate account.
The court was acting on a Public Interest Litigation challenging the Uttar Pradesh Government's move to grant entertainment tax exemption to Jaypee Sports International Ltd. However, the court did not pass any specific order to stop F1 from taking place as it said it was only considering the issue of the validity of the entertainment tax exemption.
In the interim order, the court said the organiser will have to deposit the amount in a ‘non-lien account' within a fortnight from October 30. The company cannot operate the account without the court's permission as it is subject to the final outcome of the case. F1 will be held on October 30 near Greater Noida in Uttar Pradesh.
The court also dismissed the contention of counsel for the company, Mr Mukul Rohatgi, that the court's direction can be a dampener and lead to adverse publicity as it is an international event. Mr Rohatgi claimed that the organiser had invested around Rs 2,000 crore in the project, adding that it was expecting around Rs 75 crore worth sales proceeds from tickets.
According to the petitioner Mr Amit Kumar, F1 racing event is an elitist, exclusive and dangerous sport reserved for the very rich and the elite of society and did not deserve the entertainment tax waiver.
The PIL alleged that the entertainment tax waiver was granted because the company is close to the Uttar Pradesh political leadership.