THE JURISPRUDENTIAL DICHOTOMY BETWEEN ENTERTAINMENT TAX AND SPORTING RECOGNITION IN TRANSANATIONAL COMMERCIAL LAW: AN ANALYSIS OF FORMULA ONE RACING
AUTHOR – AVINASH KESHARI* & AISHWARYA SINGH**
* LAW COLLEGE DEHRADUN, UTTARANCHAL UNIVERSITY, DEHRADUN, UTTARAKHAND, INDIA
** ASSISTANT PROFESSOR, LAW COLLEGE DEHRADUN, UTTARANCHAL UNIVERSITY, DEHRADUN, UTTARAKHAND, INDIA
BEST CITATION – AVINASH KESHARI & AISHWARYA SING,THE JURISPRUDENTIAL DICHOTOMY BETWEEN ENTERTAINMENT TAX AND SPORTING RECOGNITION IN TRANSANATIONAL COMMERCIAL LAW: AN ANALYSIS OF FORMULA ONE RACING, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (9) OF 2026, PG. 118-126, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/IJLRV6I913
Abstract
The Formula One Indian Grand Prix was a historic step in the commercialisation of representing a profound milestone in the globalization of professional sport. However, state authorities classified the event exclusively as entertainment rather than a sport, thereby stripping this premier motorsport of its professional sporting status for tax purposes. This brought about a major legal and financial crisis, which led to the untimely departure of the event after only three seasons. The main aim of the chapter is to give a comprehensive doctrinal examination of the taxation system of transnational mega-sporting events in India. It compares the domestic statutory interpretations with the international taxation paradigm. This study is methodologically based on the systematic thematic analysis of primary statutory tools: the Uttar Pradesh Entertainments and Betting Tax Act, 1979. It uses these alongside pivotal judicial pronouncements to deconstruct the arbitrary legislative distinction between games of skill and leisure activities. The analysis, by relying on the landmark Supreme Court case of K.R. Lakshmanan v. State of Tamil Nadu, asserts the sporting nature of motorsports. Moreover, the report is a critical assessment of international sports taxation jurisprudence in Formula One World Championship Ltd. v. Comm’r of Income Tax. It outlines the intricate parameters of a Permanent Establishment in Article 5(1) of the India-United Kingdom Double Taxation Avoidance Agreement. Results indicate that there is a deep-rooted systemic tension between Lex Sportiva and sovereign fiscal policies, which is intrinsically repelling foreign direct investment. As the chapter moves into the modern era, the ameliorative effect of the Goods and Services Tax regime and officialization of the Federation of Motor Sports Clubs of India is evaluated. It measures the effects of these regulatory changes on nascent events. The chapter is ended with detailed policy recommendations. Their purpose is to reconcile definition of sport under fiscal laws and incorporate special tax dispute resolution provisions in the Draft National Sports Governance Bill, 2024.
Keywords: Formula One; Entertainment Tax; Lex Sportiva; Permanent Establishment; Sports Law; DTAA.