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Tax debt threatens Indian F1 GP

2013-10-24 19:21

LAST STAND FOR WEBBER: Red Bull driver Mark Webber signs programmes for fans on Oct 24 ahead of what will for him be his last Indian F1 GP. The 2013 event is under threat of cancellation because of a tax debt. Image: AFP

Unpaid taxes and a Supreme Court hearing are threatening the cancellation of this weekend's Indian Formula 1 GP. Another nail in the event's coffin?

NEW DELHI, India - India's Supreme Court has agreed Thursday to hear a petition seeking the cancellation of this weekend's Indian Formula 1 GP because the organisers have allegedly not yet paid entertainment taxes for the 2012 event.

"We will hear the petition tomorrow," Chief Justice Sathasivam said in court, announcing a new legal snag for F1 in India which has been dogged by problems since the inaugural 2011 event.

The Supreme Court, which has executive powers, ordered organisers two years ago to freeze 25% of ticket revenues until they had settled a tax dispute with the state in which the racetrack is located.


That ruling came in response to Public Interest Litigation filed by campaigner Amit Kumar, who is also behind Thursday's petition seeking cancellation of the race on Sunday. Kumar successfully argued in 2011 that F1 was entertainment and not sport and should not benefit from tax exemptions granted by the state of Uttar Pradesh which borders the capital, New Delhi.

Entertainment tax, applicable for large-scale shows and sponsored festivals, has been levied on tickets through 2013 for the first time.

Vicky Chandhok, head of the Federation of Motor Sports Clubs of India, said he did not see the race being cancelled. “I don't think the court case will affect the event at all," he told AFP. "I am certain it will go ahead as scheduled. Such cases are not uncommon in India."

A spokesman for circuit owner Jaypee Sports International acknowledged previous tax problems in 2011 and said they were ready to comply with any order. "We will wait for the court's directive this time around as well. Whatever the court says, we are ready to follow," Askari Zaidi told AFP.


Asked about the claim that taxes had not been paid last year, he replied: "Why should we comment on somebody's allegation?"

F1 supremo Bernie Ecclestone has already removed India from the 2014 schedule, leaving the future of the event at the $450-million Buddh International Circuit in doubt.

After initially citing "logistical" problems, the billionaire was quoted in July as saying that "political" reasons caused India to miss out next year - believed to mean the lack of government support for his private empire.

Chandhok's son Karun, a former F1 driver, expressed frustration at bureaucratic problems overshadowing the contest and said it cast India in a negative light. “I think Brand India is getting affected. People should not underestimate the power of F1 and power of sport," he told the Press Trust of India news agency.

"For the teams and drivers it is a big headache to reach here... you need to have an extra lawyer for the Indian GP," he added. "The bureaucratic process is so big and it should not be."


Red Bull driver Sebastian Vettel was expected to seal the F1 Drivers’ title in Sunday's race which, local motorsports enthusiasts hope, will improve the chances of an Indian GP in 2015.

Vicky Chandhok said earlier in the day: "With venues in other countries also fighting for slots, we can't afford to miss out in 2015, but I am optimistic that the promoters will work out an agreement with F1 to have two more races. We have a great facility here.”

Jaypee Sports International, which stands to lose the most if the race does not return, insists that it will be back in 2015.

The lavish F1 road show rolled into Greater Noida, a burgeoning satellite of New Delhi, in 2011 and its slick organisation helped erase some of the memories of the chaotic Commonwealth Games of the previous year but while the inaugural race drew 95 000 spectators to the 100 000-capacity circuit, numbers fell to around 65 000 in 2012.

Ticket sales for the 2013 event have been described as “sluggish” and could fall even further.

Stay with Wheels24 for the 2013 Indian F1 GP weekend.

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