IPL: Service tax notices to DLF, Religare, Adidas

In the midst of a tax probe into finances of IPL, authorities have issued notices to several sponsors of the first edition of the Twenty20 event, including DLF, Adidas and Religare for non-payment of service tax.

The notices have asked as to why no service tax has been paid for the sponsorship deal for the first edition of IPL, held in 2008, official sources said. While DLF is the title sponsor of IPL, Adidas was sponsor of Mumbai Indians and Delhi Daredevils.

Religare was also one of the sponsors for Delhi Daredevils. DLF had bagged the exclusive title sponsorship rights of IPL at Rs 200 crore (Rs 2 billion) for a period of five years or Rs 40 crore (Rs 400 million) per annum.

As such, the tax liability of the first season of IPL for DLF comes at around Rs five crore, but the company has paid nothing, official sources said. When contacted, a DLF spokesperson admitted receiving the notice, but claimed that the company is not liable to pay service tax on title sponsorship of IPL.

"We had received the notice a few months back and (are) contesting it, as title sponsorship of sport activities is not liable to service tax," the DLF spokesperson said.

He claimed that this fact has been accepted by the department, as they have proposed the amendment in the finance bill 2010 and sponsoring of a sport would be liable to service tax only after the passage of the Budget 2010-11.

While Religare spokesperson did not respond to telephonic or email queries, comments of Adidas spokesperson could not be obtained. IT authorities had recently raided the IPL offices and its commissioner Lalit Modi's office for documents relating to various bids for IPL franchisees.

Thereafter, IT officials have conducted searches and surveys on almost all franchisees of IPL, as also its various partners.