In Brief
Formula One World Championship Limited (FOWC), a UK-based non-resident company, entered into a Race Promotion Contract with Jaypee Sports to host the F1 Grand Prix in India for US$40 million. The key issue was whether FOWC had a permanent establishment (PE) in India. The Supreme Court held that the Buddh International Circuit constituted a fixed place of business at FOWC's disposal, where it conducted its business of exploiting commercial rights during the race and surrounding periods. Despite the temporary nature (roughly 3 weeks annually), the Court found FOWC had exclusive control over the circuit, teams, and all commercial rights, meeting PE criteria of stability, productivity, and dependence. The Court rejected arguments that ownership or permanent occupation was necessary. Consequently, FOWC was liable to pay tax in India on income from the PE."
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