Bengaluru: An observation in the Comptroller and Auditor General of India (CAG) report of 2010 that the state government should collect rentals from the Karnataka State Cricket Association (KSCA) and Bangalore Golf Club (BGC) for allowing them to use prime land will be executed soon.
Both organizations will be asked to shell out 2% of their gross annual income for using leased land belonging to the public works development (PWD) which will recommend by how much it should be enhanced annually.
"There was a proposal to impose 7% turnover tax (TOT) on KSCA and BGC, but it was decided to be 2% as both are sports bodies. These institutions are not profit-driven. They promote sports activities which cover the general public and encourage tourism. They will be classified in a special category and lease rentals will be fixed at 2% of their income," a senior PWD official told TOI.
He said, based on its latest income and expenditure account statement, the KSCA will have to pay Rs 94 lakh annually, if the 2% formula is implemented.
The department's principal secretary MR Kemble directed chief engineer (communications and buildings) Thygaraj to collate the annual TOT of KSCA and BGC and give it to him before January 21.
The KSCA, spread over 16.51 acres, pays Rs 19,000 a year as rent which has not been revised for a long time. The department leased land to the association for 99 years. The department estimates the plot is worth nearly Rs 1,000 crore at current market value. The BGC pays Rs 10,000 for the 60-acre land.
Maintaining that the department had fixed improper rentals, the CAG pointed out that PWD has lost Rs 1,205 crore by leasing out prime properties to non-charitable and commercial activities for throwaway rents. It also highlighted low rentals of the Mysore Racing Club, but it was rectified after the club started paying 2% of total income as rental.
Former chief secretary SV Ranganath in August 2011 had suggested a formula that these institutions pay 1% of total income as lease rentals. The government had rejected this formula.
The PWD receipts are governed by provisions of the Karnataka Public Works Accounts Code and Karnataka Public Works Department Code. As per provisions of the Karnataka Financial Code 1958, every government servant responsible for collection of money due to the government should maintain records of assessment, demand, recovery and outstanding balance of revenue.
Law dept opinion
If the government has to show a sizeable concession, there should be some public purpose, also involving a charitable or non-commercial aspect. BGC does not come within the above parameters since its activities are commercial and profit-making and only affluent people can aspire to become its members. The present nominal rent would be against public interest and may be constituted as an undue favour shown towards an affluent and influential group of persons.
But the executive engineer (no 1, buildings division), who has the ownership of the land in a letter written to the government recently has maintained that the KSCA has pay Rs 8.42 crore every month as rentals.