Messi Kerala match fiasco: Reporter Broadcasting Company faces Rs 56.32 crore GST liability

Kanhangad, Kerala: The GST department will refund only Rs 22.68 crore to Reporter Broadcasting Company (RBC) in connection with its plans to bring football legend Lionel Messi and the Argentina team to Kerala. The department will not refund the Rs 33.64 crore penalty and interest imposed on the company, even though the proposed football match was not held and the Argentina team did not come to Kerala.

RBC had transferred Rs 126 crore to a foreign account as part of its plans to bring Messi and the Argentina team to Kerala. The GST applicable to this transaction was calculated at Rs 22,68,69,399.

The GST department’s Special Investigation Team (SIT) found that the transactions were unauthorised under the law. Based on its findings, the department imposed a penalty and interest on RBC in addition to the GST liability.

The SIT has agreed to refund the GST amount of Rs 22,68,69,399 paid in connection with the transfer to the foreign account. However, the penalty and interest will not be refunded.

The SIT also included an additional Rs 3,09,51,276 in the tax calculation for various other payments made by RBC. This took the total tax amount calculated by the department to Rs 25,78,20,675.

The additional Rs 3.09 crore represents GST on payments made by RBC for various purposes. These include expenditure on stadium renovation, payments to a Bengaluru-based company for stadium decoration and legal fees.

The additional Rs 3.09 crore will not be included in the refund.

The GST department calculated the penalty and interest based on the total tax amount of Rs 25.78 crore. The penalty is equivalent to 100 per cent of the tax amount.

Including the penalty and interest, the total amount payable by RBC has been calculated at Rs 56,32,79,332, or Rs 56.32 crore.

The penalty is imposed in stages after a notice demanding payment of tax. It is initially 25 per cent if the amount is paid within one month of the notice. The penalty rises to 50 per cent and eventually to 100 per cent. This provision applies to transactions considered unauthorised under the law.

RBC has not yet paid the total tax liability of Rs 56.32 crore. The first transfer to the foreign account was made 472 days ago, while 342 days have passed since the second transfer.

As the tax liability remains unpaid, the interest payable by RBC will continue to increase until the amount is paid.