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November 29, 2011
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In Focus: The IPL Mess
The BCCI has been served with 19 show-cause notices by India's Directorate of Enforcement for alleged violations of the country's Foreign Exchange Management Act [FEMA] totaling approximately Rs 1077.43 crores (US$ 207.52 million), according to a government report investigating the board and its management of the IPL.
The BCCI's alleged violations of the FEMA regulations are believed to have occurred when the BCCI moved the Twenty20 tournament to South Africa in 2009 amid security concerns caused by the holding of India' s national elections at the same time as the IPL.
Speaking in Parliament earlier on Tuesday, Ajay Maken, India's sports minister, said that various government agencies have conducted inquiries into the allegations of irregularities by the BCCI.
These include the FEMA violations totalling Rs 1077.43 crores, Income Tax assessments of Rs.118.04 crores and Rs.257.12 crores for 2007-08 and 2008-09 respectively (total Rs 375.16 crores) as well as the Service Tax department's show cause notices involving an amount of Rs 159.12 crores to various service providers/ stakeholders in relation to the IPL for the recovery of service tax.
The total payments being sought from the BCCI and its stakeholders amounts to more than Rs 1600 crores.
The report states that the Income Tax department has withdrawn the tax exempt status of the board, and claimed back taxes amounting to Rs.118.04 crores and Rs.257.12 crores for the years 2007-08 and 2008-09 respectively. The tax exempt status had been removed because the BCCI had "amended its objects" - that is changed the basic definition of its functioning from June 1, 2006, an act which had required a fresh registration. The change had been noticed only when the BCCI's tax assessment proceedings were being carried out for the year 2007-08. Given that there had been no fresh registration done since the changes, the government had stated that the BCCI's old registration did not survive and neither could its tax exempt status.
Government investigations are also being conducted into "the source of foreign investments in individual teams is being investigated and references through the Foreign Tax Division." The report also stated that "preliminary investigations have shown prima facie evidence of monopolistic nature of working of BCCI and the companies involved" in awarding media rights for the IPL. The Ministry of Corporate Affairs has therefore been instructed to investigate these issues under the provisions of the Competition Act, 2002.
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Plays of the day from the IPL match between Chennai Super Kings and Kings XI Punjab in Abu Dhabi