BCCI gets ready for taxing spell

NEW DELHI: The service tax department has issued summons to the Board of Control for Cricket in India, seeking information about the services rendered by the body such as event management, advertising and franchisee arrangements. BCCI is also understood to have received a show-cause notice from the income tax department.

The service tax department issued summons to BCCI after its letters seeking information about the various arrangements for event management and advertising failed to elicit any response from the organisation. Summons are primarily issued to extract information from an assessee and are legally binding unlike the show-cause notice.

The I-T department, it is understood, also has sent a show-cause notice on tax deducted at source (TDS) and sought contract details of cricketers contracted by IPL from BCCI. When contacted, BCCI vice-president Rajeev Shukla denied the developments. ���We have not received any summons or letters. All BCCI dealings are transparent,��� he said in response to an ET query.

However, sources close to the developments said BCCI is preparing its response to the concerned authorities on the grounds that most of its revenues are split between various entities and that a service tax cannot be issued on one single body. The cricket board has multiple revenues streams, which includes amounts bid and revenues generated by franchisees, sales of media rights and sales of sponsorships from the title and ground sponsors.

According to the agreements, 20% of the revenues generated by franchisee rights are given to the BCCI. The cricket board had come under the scanner of the service tax department soon after the IPL auction. The Directorate General of Service Tax had asked the field formations to collect information on the franchisee arrangements that BCCI had entered into.

The local commissionerate in Mumbai had subsequently written letters to the BCCI. It has now issued summons after the organisation did not respond to the letters and provide the relevant details. This is not the first time that the BCCI has had a brush with the service tax department. Earlier also, it had a dispute with the department for alleged non-payment of service tax.