TaxTMI 
TaxTMI 
2017 (12) TMI 1238
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....9153/2016, C.M. APPL.37062-37063/2016 W.P.(C) 4966/2013, C.M. APPL.11216/2013, 6704/2016, 6706/2014 & 44758/2016, W.P.(C) 10729/2016, W.P.(C) 10731/2016 W.P.(C) 7465/2013, C.M. APPL.15967/2013, 4926/2014, 13750/2014, 5494/2015 & 12856/2016 W.P.(C) 2586/2017, C.M. APPL.11182/2017 & 11183/2017 W.P.(C) 7495/2014, C.M. APPL.17744/2014 & 22352/2015 W.P.(C) 9661/2016 W.P. (C) 12287/2015, C.M. APPL.32549/2015, Present: Mr. Arshad Hidaytullah, Sr. Advocate with Mr. Jitendra Singh and Mr. Saurabh S. Sinha, Advocates for petitioner/FDCI. Mr. Amit Sibal, Sr. Advocate along with Ms. Isha Jha and Ms. Ishita Srivastava, Advocates for petitioners in W.P.(C)7465/2013 & 2586/2017. Mr. Kamal Sawhney with Mr. Shikhar Garg, Advocates for petitioner in W.P.(C)4966/2013. Mr. Abhinav Agnihotri, Advocate for petitioner-Den Soccer Pvt. Ltd. in W.P.(C) 2886/2015 & 5994/2016. Mr. Siddharth Bambha, Advocate along with Mr. Rachit Shrivastava, Advocate for the petitioners in W.P.(C) 12287/2015. Mr. Atul Sharma with Mr. Abhinav Agnihotri and Ms. Satakshi Som, Advocates for petitioners in W.P.(C)7495/2014 & 9661/2016. Mr. Parag P. Tripathi, Sr. Advocate with Mr. Kunal Bahari, Advocates ....
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....et Access Initiative. Besides this, it organizes several events (such as seminars, workshops, marketing events, setting up academic scholarships, liaison with other international fashion councils and government bodies, forecasting and development of new trends and setting industry standards and norms). By providing a platform to up and coming fashion designers, FDCI assists the promotion of Indian fashion worldwide and promotes fashion trade in the domestic and international markets. 3. Further to its objectives, FDCI, as a trade promotion council organises fashion weeks or fashion shows. These fashion shows are styled as market business promotion events and are the India Fashion Week (organised bi-annually), India Men's Week and Couture Week. None of these events are ticketed and entry is strictly by invitation; in other words the only invitees are potential domestic and international buyers and the media who are given invitations solely for promoting and marketing Indian fashion who do not buy tickets for admission. However, as organizing such events require funds, the petitioner enters into sponsorship/ partnership agreements with various parties. The amounts received are the....
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....d between 18.03.2009- 23.03.2009 and 15.10.2008-19.10.2008 and further challenged the assessment order dated 11.06.2009 passed by the AETO in respect of the latter two events. FDCI inter alia also contended that tax was not payable on sponsorship amounts and that the order passed by the AETO had ignored the fact that sponsorship amounts were beyond the purview of the Act and also that the relationship between a sponsor and organizer was governed by sponsorship agreements. This Court by its order dated 30.04.2012 was of the opinion that the true nature of sponsorship agreements would have to be discerned to ascertain the nature of payments for the purpose of deciding if entertainment tax was payable. The court observed that: "16. We are of the view that unless the terms and conditions of the sponsorship agreement are examined it may not be possible to ascertain the true nature of the payment and decide about the applicability of the relevant provisions of the Act. The AETO, as noted above, has not carried out this exercise and has rested his conclusion merely on the statutory provisions without ascertaining the basic facts or examining the terms and conditions of the sponso....
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....ferent types- while on the one hand it may relate to sponsoring an event where the trade of the sponsor is completely different from the event- like a corporate house sponsoring a music festival, it is the second kind which the petitioner is concerned with i.e. the one where the sponsor funds an event which is integral to its trade/ business. FDCI argues that in fashion events, brand owners sponsor the show and do so purely for the purpose of furthering their business interests and are not in it for amusement. Furthermore, but for such sponsorship, talented designers and those in the fashion industry, would be unable to show case them. The sponsorship enables the event, by providing patronage, which in turn, results in exposure of designers' capabilities. No single individual or fashion house has the ability, in the country to organize an event, to showcase budding designers, whose offerings can be known to the public. The sponsors, by enabling the event, provide a platform for the future growth of such designs and products of designers and eventual growth of the industry. By participating in the events in the way they are, sponsors advertise/ promote their brands not only by showc....
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....lanation seeks to equally place two classes and proceeds to tax them in the same manner ignoring that organizers who fund events cannot be taxed for payments made to access a place of entertainment. It is argued that fashion shows are not entertainment as the event participants are not entertainers, in any sense of the term, nor are the organizers or event facilitators creating an event for which there is "admission to entertainment". The core feature - that of receiving entertainment or being entertained is absent in these cases. Unlike typical entertainment events, meant to gratify, amuse or entertain viewers or participants, fashion shows, which are the subject matter of these cases, are "closed door" events the access to which is granted to only the organizers' invitees. The purpose of the event is not to entertain, but to sponsorship payments are not towards obtaining admission to a place of entertainment but are made by way of contracts which stipulate reciprocal rights from the primary organizer for purposes of advertising, organising conferences, parties, setting up stalls, banners etc. These do not constitute access to the event, nor can be equated with the price or consid....
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....mendment must fulfill the test of Article 14 in the sense that the differentia must have a rational nexus with the object of the Act. 9. FDCI challenges the impugned amendment to the Explanation on the ground that the power of a state is to impose taxes under Entry 62 of list II on "luxuries including entertainment" and consequently the impugned explanation is ultra vires the Constitution and is beyond the scope of Entertainment Tax Act. The petitioners argue that entertainment is an activity by which one person provides entertainment to another; organizers such as the petitioner, through sponsorship funding organize or create events. Whether an event is an entertainment or not would depend on the facts and as such entertainment could not be defined in a straitjacket formula. The petitioner argues that Entry 62 permits the imposition of tax only in cases where entertainment is provided and not merely for an event. As a corollary, what Entry 62 allows for the state is to legislate in respect of taxes which would be payable for a person to have access to a place of entertainment and to be the beneficiary of an entertainment event. Further, the Act does not contemplate a situation ....
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.... Counsel also relied on Section 7, which was amended in 2010, to say that when the normal or traditional forms of entertainment were not covered by the provisions, not only did the legislature amend the definition in Section 2 (ha) and the definition of "admission to entertainment" by providing separately for clause (vi), to Section 2 (m), but created a separate charge. Relying on Union of India v M/s Martin Lottery Agencies Ltd2009 (12) SCC 209, learned senior counsel urged that levy through explanation, in a retrospective manner, falls foul of the Constitution of India. 12. Reliance upon the 1997 Rules (especially Rule 11, Form 6) is placed to reinforce this argument. They deal with the form, and manner in which information is to be given to the Commissioner before an event can be held. The petitioner submits that Form 6, which is to be submitted in compliance to Rule 11 in case of non-ticketed events (and which recognizes both sponsorship and advertisement amounts), nowhere discloses the tax component associated with the latter amounts and consequently it is a logical conclusion that when there is no payment for admission there is no taxing incidence. It was submitted that in....
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....as contravened established legal principles of giving taxing statutes retrospective effect only in exceptional and rare cases. The device used by introducing, an explanation cannot widen the scope of the original provision and certainly not in a way that interferes, or conflict with the main provisions of the Act. In this regard, learned senior counsel relied on the judgment reported as Sundaram Pillai Vs Pattabiraman (1985) 1 SCC 591 which through a detailed analysis of case law relating to statutory interpretation and the scope of an explanation had enunciated that such a device has limitations and cannot widen the scope of something which was never intended to be covered. In other words, said counsel, the explanation, which are impugned in these batches of cases, are not clarificatory, notwithstanding the state's interpretation to the contrary, but seek to expropriate the petitioners through an illegal levy, in a retrospective manner. The petitioner argues that retrospective effect should be given only for clarificatory purposes or to remove technical defects or in cases of economic importance- an instance being the protection of a tax base from unscrupulous schemes created with....
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....the IPL (the tournament as a whole), the responsibility of organizing each match is on the franchise that is playing at their home stadium. BCCI refers to its Franchise Agreement with GMR Sports Private Limited, whose team (Delhi Daredevils) has played most of its home matches (except those played in South Africa in 2009 and some matches played at Raipur) at the Ferozshah Kotla Ground in Delhi. Accordingly, while the DDCA may have provided certain assistance to the Franchisee in organizing the said matches at the Ferozshah Kotla (by virtue of being the owner of the Stadium), the responsibility of organizing the IPL T20 matches played at the Stadium is solely on the Franchisee (GMR). 16. It is argued by Mr. Kamal Sawhney for BCCI that all the tickets for PL T20 matches played at the said Stadium are printed by GMR and the proceeds from the sale of the said tickets are also retained solely by the Franchisee. In fact GMR is treated by GNCTD as the proprietor for all matches held in Delhi in the past. Furthermore, GMR has in the past, filed entertainment tax returns and paid them. It is urged that the agreement between GMR and DDCA clearly shows that it is the Franchisee who is full....
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....he cricket match or matches concerned, by allowing advertisements in the stadium of the sponsors, merely because some access to sponsors' representatives is provided for the event. 18. It is submitted that what the Act empowers the respondents to do is to collect tax on the occurrence of the specified event, i.e. admission to entertainment. In the present case, the admission to the entertainment is through sale of tickets; the tax on that incident is collected by GMR and paid to the respondents. Such being the case, the impugned notification and amendment, to the extent it purports to create a species of "entry" for the entertainment by deeming sponsorships as also another form, is beyond the mandate permitted to the legislature. In saying so, counsel urges that the taxing event or incident, i.e. is one whole, and gets completed, with the physical access and entry to the spectator; by seeking to add another layer by an artificial fiction of a deemed "entry" through sponsorship, the legislature is seeking to conjure an event that does not occur; moreover it is layering up one transaction with several artificial ones, merely to collect tax from transactions that fall outside the p....
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....ship is to give visibility to the donor/sponsor's products or services. They cannot constitute "entertainment". 22. DEN Soccer (P) Ltd, (hereafter "DEN", the petitioner in WP 7495/2014) is, like BCCI, aggrieved by the respondent's position that entertainment tax is payable for sponsorship amounts received by it. DEN was granted franchise rights by Football Sports Development Private Limited for forming a football team to represent Delhi in a football tournament called "Indian Super League" (ISL) organized by Football Sports Development Private Limited. The team formed by DEN is called "De Dynamos Football Club". As franchisee of the tournament, DEN is obligated to organize certain matches in Delhi and print, sell and distribute tickets for the matches to be held at Delhi. It is alleged that DEN approached various organizations and companies for providing sponsorships for sponsoring the event. Ordinarily the benefits provided to the sponsors for the consideration paid for the sponsorship relates to displaying the sponsors company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition as well as other benefits a....
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....gues that dispute with respect to entertainment tax on sponsorship arose for the first time only in 2008 when the government refused to grant exemption in respect of events to be conducted in that year and required the petitioner to deposit the entire taxable amount with respect to sponsorship payments. Against this, the petitioner approached this Court for issue of NOC. Since the petitioner did not protest nor did it raise any objection with respect to the previous years, where exemption was sought and granted, the petitioner is estopped by conduct from raising the issue now at this belated stage and after having claimed and received several exemptions. 24. Mr. Tripathi contends that the amendment is well within the defined limits of Entry 62 of List II of the Seventh Schedule of the Constitution. He contends that the second Explanation cannot be ultra vires the Constitution or the Entertainment Tax Act because it does not extend or enlarge the scope of the taxing incidence and has been added only for clarificatory purposes. Learned senior counsel relies on the phraseology in Section 2(m)(i) and 2(m)(iv) and explains that the term "person" includes any person including a compan....
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....by invite is possible only because of the contributions made by the sponsors. The sponsors may not directly watch the program but in an indirect way get their clients to watch the shows being hosted by the petitioner. The revenue contends that the scheme of the DEBT Act does not make distinctions between direct and indirect beneficiaries of an entertainment. Similarly nowhere is the definition of "payment for admission" restricted to merely payment through ticket. As long as a contribution has been made for the admission to an entertainment place the same would be liable to tax irrespective of who watches the show. The revenue urges that no distinction exists between a person who buys a ticket and a sponsor because either way both ultimately fund/ finance the producer/ proprietor of the event; while in the latter case the contributor is an indirect beneficiary the former is a case of direct beneficiary. If the logic of the petitioner had to be followed, that no tax liability accrues on a sponsor's contribution because it is used for the purpose of funding an event, then for the same reason no entertainment tax should be charged from a ticket holder too. 27. The revenue argues th....
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.... SCC 622 and ETO Vs. Ambae Picture Palace (1994) 1 SCC 209 and contends that the amendment is only clarificatory and in the circumstances there is no bar to giving it retrospective effect. Mr. Tripathi relies on Raman Lal Bhai Lal Patel v State of Gujarat reported as (2008) 5 SCC 449 which held that where the definition is an inclusive definition, the use of the word 'includes' indicates an intention to enlarge the meaning of the word used in the statute. Counsel also relied on ND.P. Namboodripad v. Union of India (2007) 4 SCC 502, where the Supreme Court observed that: " .......... The word "includes" has different meanings in different contexts. Standard dictionaries assign more than one meaning to the word "include". Webster's Dictionary defines the word "include" as synonymous with "comprise" or "contain". Illustrated Oxford Dictionary defines the word "include" as: (i) comprise or reckon in as a part of a whole; (ii) treat or regard as so included. Collins Dictionary of English Language defines the word "includes" as: (i) to have as contents or part of the contents; be made up of or contain; (ii) to add as part of something else; put in as part of a set, group o....
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....Learned senior counsel submitted that as a result, the amendments made to the Entertainment Tax Act cannot be termed as ultra vires or in any manner unenforceable. Analysis and Conclusions 32. The vires of the impugned amendment to Section 2(m) which, by the Second Explanation brings to tax sponsorship amounts paid, in lieu of advertisements by deeming it to be payment for admission is premised upon the deemed fiction and inclusive definition. It is contended that sponsorship amounts received by proprietors for the purpose of organizing and putting together an event do not fall within the purview of the Entertainment Tax Act. Through a deeming fiction, sponsorship amounts, value of the goods supplied or services rendered in lieu of advertisement/promotion are now bracketed as payment for admission to an entertainment; the petitioners argue that the legislature has gone beyond its competence and instead of levying tax on payment for admission to an entertainment, is now levying taxes on advertisements and is going beyond the pale of Entry 62 of List II of the Seventh Schedule of the Constitution which is nothing but colourable exercise of power. The Petitioners argue that by v....
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....g on entertainment. In the case of the petitioner FDCI, the first issue, which needs to be addressed, is whether as a fashion development and promotion society, which conducts fashion shows provides entertainment by hosting such shows. In Geeta Enterprise Vs State of U.P. & Ors, (1983) 4 SCC 202, a three Judge bench of the Supreme Court in the context of the U.P. Entertainment and Betting Tax Act, 1937, laid down certain tests to decipher if a given event is an entertainment for the purpose of levying tax. These were: "(1) That the show, performance, game or sport, etc. must contain a public colour in that the show should be open to public in a hall, theatre or any other place where members of the public are invited or attend the show; (2) That the show may provide any kind of amusement whether sport, game or even a performance which requires some amount of skill; in some of the cases, it has been held that even holding of a tambola in a club hall amounts to entertainment although the playing of tambola does, to some extent, involves a little skill; (3) That even if admission to the hall may be free but if the exhibitor derives some benefit in terms of money it would be de....
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....private performance by some musicians, or playing of recorded music, is not "entry to entertainment" event, within the meaning of the Act. Likewise, free entry to a speech or performance, by a popular public figure, or motivational speaker, or a gratis performance by a popular entertainer which involves considerable expense, borne by a few sponsors (without which the event cannot take place) would not be an admission to an entertainment, unless those seeking the entertainment event are made to pay. Similarly, the judgment in Poorvi (supra) in the opinion of this court is of no assistance. That case did not concern entry to an entertainment event; it sought to tax a cable operator- much the same way the present Act does, through a separate definition as well as a charging mechanism. The relevant provisions of the state Act, in that case read as follows: "(4a) Where any owner, or any person for the time being in possession, of any electrical, electronic or mechanical device, is a cable operator and receives through such device the signal of any performance, film or any other programme telecast, and thereafter such owner or person, against payment received or receivable,- (i) ex....
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....tertainment, which a person is required to make in any form as a condition of attending, or continuing to attend the entertainment, either in addition to the payment, if any, for admission to the entertainment or without any such payment for admission; (v) any payment made by a person who having been admitted to one part of a place of entertainment is subsequently admitted to another part thereof, for admission to which a payment involving tax or more tax is required; Explanation 1: Any subscription raised, contribution received or donation collected in connection with an entertainment, where admission is partly or entirely by tickets/ invitation specifying the amount of admission or reduced rate of ticket shall be deemed to be payment for admission; Explanation 2: Any sponsorship amount paid or value of goods supplied or services rendered or benefits provided to the organizer of an entertainment programme in lieu of advertisement of sponsor's produce/brand name or otherwise shall be deemed to be payment for admission." Explanations 1 and 2 were inserted on 1st October, 2012, with retrospective effect from 1st April, 1998."Proprietor" is defined by Section 2(o); it ....
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....n paid in the normal course, the proprietor shall be liable to pay tax which would have been payable in a normal course at full house capacity or the tax for the programme held in lieu of the regular entertainment programme whichever is higher. (6) Where the payment for admission to an entertainment, referred to in sub-section (1), is made wholly or partly, the means of a lump sum paid as subscription, contribution, donation or otherwise, the tax shall be paid on the amount of such lump sum and of the amount of the payment for admission, if any, made otherwise (7) Where in a hotel or a restaurant, or a club, entertainment is provided by way of cabarets, floor shows, or entertainment is organised on special occasion along with any meal or refreshment with a view to attract customers, the same shall be taxed at a rate to be notified under sub-section (1)." Section 8 prescribes relates to information, which has to be provided by a person, who holds entertainment. The said section reads:- "Section 8 - Information before holding entertainment 1) No entertainment on which tax is leviable shall be held without prior information being given to the Commissioner in the manner pre....
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.... machinery appliances or foodstuff used in the production of such products; it may, subject to such terms and conditions as it may deem fit to impose, grant exemption to such entertainment from payment of tax under this Act: PROVIDED that the government may cancel such exemption if it is satisfied that the exemption was obtained through fraud or misrepresentation, or that the proprietor of such entertainment has failed to comply with any of the terms or conditions imposed or directions issued in this behalf and thereafter the proprietor shall be liable to pay the tax which would have been payable had not the entertainment been so exempted. (4) Where the government is satisfied that the entertainment programme is not conducted for profit and the entire gross proceeds from payment for admission as defined in clause (1) of section 2 of an entertainment are to be devoted to philanthropic, religious or charitable purposes, without any deductions whatsoever on account of the expenses of the entertainment, it may, subject to the rules made under this Act, grant exemption to such entertainment from payment of tax under this Act on such terms and conditions as it may deem fit to impose. ....
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.... in the certificate. (4) Where the Government is satisfied, it may grant the exemption after taking such security as it may consider necessary to secure payment of the tax due in case the exemption is cancelled under the proviso to sub-section (3) of section 14 of the Act. (5) The proprietor of the exempted entertainment shall submit to the Commissioner all tickets for admission for attestation in the manner required by the Commissioner before bringing them into use. He shall also prepare and submit to the Commissioner or any other officer authorised by him, within fifteen days from the date of entertainment a full and true account of the tickets issued at different rates and the gross amount collected from the sale thereof along with the counterfoils of used tickets and all the unused ticket books. He shall also furnish a full and true account of the expenditure incurred along with the vouchers, if so required by the Commissioner or any other office authorised by him, within fifteen days from the date of entertainment. 36. Exemption by Government under section 14(4) of the Act. (1) The application for exemption under sub- section (4) of section 14 of the Act shall be present....
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....hows. These shows do not have a public colour in the sense that these events are for a select audience. There is no provision for the public to buy tickets to watch the show. In fact, no tickets are sold publicly. FDCI as well as its various organizing partners, who have business interest in these shows, to further their business select the audience for the shows. At fashion shows the nature of the goods showcased are generally luxury goods or brands and these shows are generally styled glamorously with after parties, special appearances by models etc. FDCI's position is that the shows are not held entertaining or providing amusement but for the purpose of furthering business; the dominant purpose here is promoting business; if incidentally the audience is entertained it would not imply that the primary purpose for organizing the event is entertainment. These events are held for a fixed audience picked by the organizers themselves; the "public" element is absent in the case of FDCI. It is true that the events in question showcase luxury goods in luxury locations like five star hotels and convention centres. However, by that reason alone the events cannot be labeled as entertainment....
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....ed by the revenue that "seats or other accommodation" appearing in Section 2(m)(i) means accommodation in any form in the widest sense and will not attract the principle of ejusdem generis to mean "accommodation for those persons who are being entertained". The revenue relies upon Union of India v Alok Kumar (2010) 5 SCC 349 to contend that in this case there are not several different expressions representative of one genus. 45. In the present case, "accommodation" necessarily means all kinds of accommodation. Once any payment for admission to entertainment is made, Section 6, the charging provision that subjects to tax all such payments is attracted. Section 6(6) taxes any payment for admission to entertainment under Section 6(1) made by way of subscription, contribution and donation or otherwise. The revenue contends that the phrase "or otherwise" in Section 6(6) is to be construed widely to include sponsorship amounts. It relies on the decision of the Supreme Court in Lila Vati Bai v State of Bombay AIR 1957 SC 521 where it was held that when the legislature uses the term "otherwise" in a statute it does so to cover all possible cases occurring due to any reason. On the other....
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....rtistic event or a radio or television programme in return for advertising. Thus, sponsors are those individuals or concerns who provide monetary contribution and in return for some rights or privileges, which may include advertisement rights. Through the Second Explanation, read with Section 6, the legislature includes sponsorship into the taxing ambit. 49. Two questions arise in the circumstance - firstly can the legislature increase the scope of taxability by inserting an Explanation and secondly is such inclusion of sponsorship amounts within the scope and object of the Entertainment Tax Act read as a whole. An Explanation is added to clear any ambiguities that may arise while interpreting or applying a provision of the statute; it is not meant to enlarge the scope of the original provision. It only explains what has already been given and cannot through the process of explaining or clarifying seek to add that which is not there in the original provision. When there is some challenge to the scope of the explanation, it is useful to discern any ambiguity by testing its true effect in the context of the whole Act. In this context the decision of the Supreme Court in Sundaram P....
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....rship is payment to admission. To determine this, the pith and substance of the Act will have to be examined. In E.V. Chinnaiah Vs State of Andhra Pradesh &Ors(2005) 1 SCC 394, a five judge bench of the Supreme Court held that while the power to legislate is derived from Article 245, the areas of legislation are demarcated by the three lists under Schedule VII. It was held that: "32. One of the proven methods of examining the legislative competence of an enactment is by the application of doctrine of pith and substance. This doctrine is applied when the legislative competence of a Legislature with regard to a particular enactment is challenged with reference to the Entries in various lists and if there is a challenge to the legislative competence the courts will try to ascertain the pith and substance of such enactment in question is genuinely referable to the field of legislation allotted to the State under the constitutional scheme." 51. One time - honoured principle applied to determine legislative competence is that a Court must not take a doctrinaire or pedantic approach but should weigh the question in a liberal manner. Though the entries in the Seventh Schedule only ou....
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....tainment, referred to in sub-section (1), is made wholly or partly, by means of a lump sum paid as subscription, contribution, donation or otherwise, the tax shall be paid on the amount of such lump sum and on the amount of payment for admission, if any, made otherwise." A proprietor in the context of Section 6 and for the purpose of the issue at hand is defined under Section 2(o) as: "(o) "Proprietor" in relation to any entertainment includes any person- (i) Connected with the organization of the entertainment" 54. In this backdrop what is to be determined is whether sponsorship amounts fall within the classification under Section 6(6). The substance of levy under the Act is payment for admission in any form to a place of entertainment. The taxing incidence therefore, is payment for admission to entertainment, not the entertainment event itself. When juxtaposed with the scheme of the Act, which is to tax payment made for admission to entertainment, the question, which presents itself, is whether sponsorship amounts, made through agreements, for business purposes are payments for admission to a place of entertainment. Payment for admission to a place of entertainment, i....
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....ny entertainment, whether for a specified period or on a continuous basis;" 37. In our view, the submission is untenable for more reasons than one. First, section 2 (d) (iv)is only the measure of tax and it does not create the charge which is created by section 3. The question of going to the measure of the tax would arise only if it is found that the charge of tax is attracted. Under section 3 read with section 2 (d) and section 2 (a) , the charge or levy of tax is attracted only if an entertainment takes place in a specified place or locations and persons are admitted to the place on payment of a charge to the proprietor providing the entertainment. In the present case, as DTH operation is not a place-related entertainment, it is not covered by the charging section 3 read with section 2 (a) and 2 (b) of the 1936 Act. Consequently, the question of going to section 2 (d) (iv) does not arise. Moreover, even if section 2 (d) (iv) is to be read as an extension of section 3 and, thus, as a part of the charge, it does not make any difference at all because section 2 (d) (iv) refers to "entertainment" which takes us back to section 2 (b) and finally to section 2 (a). 38. We have he....
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.... organizing of the lottery is a form of entertainment. Introduction of such new concept itself would have a constitutional implication. In the year 2003, while amending the provisions of 1994 Act, the Constitution was also amended and Article 268A and Entry 92C in List I were inserted. The courts are in future required to determine whether a service tax within the meaning of Entry 92C would cover sale of lottery or it would come within the purview of residuary entry containing Entry 97 List I. If it is held to be a taxing provision within the purview of Entry 97, the same will have a bearing on the States. The Explanation so read appears to be a charging provision. It states about taxing need. It can be termed to be asui generis tax. If it is a different kind of tax, the same may be held to be running contrary to the ordinary concept of service tax. It may, thus, be held to be a standalone clause. A constitutional question may have to be raised and answered as to whether the taxing power can be segregated. If by reason of the said explanation, the taxing net has been widened, it cannot be held to be retrospective in operation." 57. This court's reasoning is bolstered, to a....
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....e service provider of cable television signals and value added services, registered or licensed under the Cable Television Network (Regulation) Act, 1995 (7 of 1995); xxxxxxxxxxxxxxxx (s) "subscriber" means a person who receives the signals of cable television network and value added services from multi- system operator or from cable operator or from direct-to-home (DTH) broadcasting service at a place indicated by him to the service provider, without further transmitting it to any other person; Explanation In case of hotels each room or premises where signals of cable television network are received shall be treated as a subscriber. Explanation II: In case of direct-to-home (DTH), every television set or computer set receiving the signals shall be treated as a subscriber; xxxxxxxxxxxxxxxx 7. Tax on cable, video service and direct-to-home (DTH) service (1) Subject to the provisions of this Act, there shall be levied and paid an entertainment tax on all payments for admission to an entertainment through a direct-to-home (DTH) or through a cable television network with addressable system or otherwise, other than entertainment to which section 6 applies, at such r....
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.... room having the facility of cable service. The proprietor shall file a monthly return in Form - 11 in duplicate showing the category of hotel, number of rooms having the facility of cable service and the amount of tax calculated. The amount of tax so calculated shall be deposited in the Government account and the return and challan of payment shall be furnished to the assessing authority within seven days from the end of the month for which tax is due and the provisions of sub-rules (2) and (3) of rule 25 shall mutatis mutandis apply. (3) Where the subscriber is a restaurant, the entertainment tax shall be paid as per the provisions of sub-section (3) of of section 7 of the Act and each room and premises where signals of cable television network are received, shall be treated as a subscriber. The provisions of sub-rules (2) and (3) of rule 25 shall mutatis mutandis apply." 58. It is evident, from the above provisions that Section 7 is a separate charging section. It clearly stipulates that entertainment tax is to be levied on all payments for admission to entertainment, inter alia, through a cable television network or DTH service. Now, if the respondent/NCT's arguments were....
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.... That pertains to the fundamental integrality of the statutory scheme provided for each head." 60. In Virtual Soft Systems v Commissioner of Income Tax, 2007 (289) 83 the Supreme Court again reiterated the principle by saying that "the charge and its computation were two parts of an integral whole and concluded therefore, that if the computation could not be done, the charge was not intended to apply." A similar view was expressed in Commissioner of Income Tax v D.P. Sandhu Bros [2005] 273 ITR 1 (SC) where describing the judgment in Srinivasa Setty it was held that "all transactions encompassed by Section 45 must fall within the computation provisions of Section 48. If the computation as provided under Section 48 could not be applied to a particular transaction, it must be regarded as "never intended by Section 45 to be the subject of the charge". 61. Govind Saran Ganga Saran vs. Commissioner of Sales Tax and Ors1985 (Supp) SCC 205 held that: "6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the ....
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....cify the number of shows including special shows, if any, to be held on a daily basis, etc. In Form 6 an applicant has to provide details of place or places where shows are proposed to be held, details of expenses, sources for meeting the expenses, name of sponsors (Serial No. 10) and the amount sponsored by them, advertiser and the amount received from them. Details with regard to number of shows daily held, number of seats in each class, number of each kind of tickets, etc. too has to be furnished. Form 6 stipulates that an applicant should give details of the amount of security deposit, if any, lying with the department if shows were previously held and amount of arrears of tax, if any, to be deposited in respect of shows previously held. 63. The forms, after submission are to be processed and dealt with by the authorities under Section 13 of the Act read with Rules 30 and 31. Section 13 reads as under:- "Section 13 - Deposit and forfeiture of security (1) Every proprietor before holding an entertainment on which tax is leviable shall deposit such security and in such manner as may be prescribed. The Commissioner may deduct any arrears of tax from the security and may vary....
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....an fifty per cent of such amount: PROVIDED that in case of a cinema which has not defaulted in the deposit of tax during the preceding three years, the Commissioner may on application in this behalf, reduce the minimum amount of security as he may deem fit. He may, however, re-fix the amount of security as prescribed under this rule in case of any subsequent default in the deposit of tax: PROVIDED FURTHER that the amount of security may be fixed at an amount higher than the full house capacity, if the Commissioner deems it fit in the interest of revenue. [(2) The amount of security for a direct-to-home (DTH) service shall be fixed by the Commissioner and shall not be more than the total tax chargeable for a period of three months.]" 65. By Rule 31, the Commissioner is entitled to fix the amount of security, not exceeding the amount of the total tax chargeable for the full house capacity. The proprietor is required to deposit security in terms of Rule 30 (1) by way of bank draft or pay order or bank guarantee or a fixed deposit receipt, for such amount as may be specified by the Commissioner under Rule 31. The second proviso stipulates that the amount of security may be ....
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....from companies, where a soft drink beverage was featured - in the production, - ref https://www.slideshare.net/amyberi/case-study-on360-degree-marketing-zindagi-na-milegi-dobara). Likewise, in Yaadein, apparently the producers received substantial amounts from a mouth-freshener producing company. The sponsor's objective in these cases is typically to secure visibility for their products/services. The end production may or may not be priced. If it is, the cost of the ticket for admission purposes, only, is the taxing incident. Any other interpretation would inject an uncontrolled element of subjectivity to the incidence of taxation, which is confined to entry to an admission event and nothing else. 68. Exhibitions, fashion shows, cultural festivals are generally conducted as a marketing exercise to further business of the concerned industry. For instance, in a college/cultural festival several private (and corporate) sponsors, in lieu of advertisement fund the festival. Such festivals are typically organized to facilitate interaction and dialogue between students from similar disciplines from different colleges. All such events are by invitation only where students do not purchas....
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.... it was held that payments made by the customers to the restaurant were not payment for admission to entertainment within the meaning of section 1(1) of the Finance (New Duties) Act, 1916, and that the entertainment duty was therefore not chargeable in respect thereof. The majority of the Judges held that the payments made by the customers of the restaurants were not "payments for admission" to an entertainment within the meaning of the Act. Bailhache J. put the matter thus: "The question, therefore, which we have to determine is, what is the meaning of those words 'payment for admission' to an entertainment in that section. I ask myself whether any ordinary intelligent person who had taken tea or had dined at the Trocadero would, using ordinary language, say that he had paid for admission to the Trocadero. The answer to that question must be in the negative. In ordinary language when one has paid for a dinner in a restaurant, one does not say that one has paid for admission to the restaurant any more than, when one pays for a pair of boots bought in a shop, one would say one was paying for admission to the shop." 71. In Calico Mills Ltd. vs. State of Madhya Pr....
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....goods. Nobody can doubt that the object of the display of the fabrics manufactured by the petitioners inside the Calico Dome was to advertise them and to promote their sales. There was not anything in the nature of an organised entertainment in the display of the fabrics themselves. A person who visited the Dome went there as a prospective buyer and not as a spectator or as one of the audience to an entertainment. A display of the fabrics by mannequins wearing them was no doubt arranged during the evening hours. But that was not for the purpose of affording amusement Or gratification to the visitors but for enabling them to make a selection in the purchase of the goods they desired. It is common knowledge that the elegance and beauty of a wearing apparel can be best judged and appreciated when it is shown off by a person wearing it and not when it is folded and wrapped in packages. It is also well known that many drapers and milliners of repute and standing display their goods on dummy models. It seems to us that a place where fabrics are displayed and shown off by mannequins wearing them is no more a place of entertainment than a shop establishment where wearing apparels are....
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....quiring the visitors in certain hours to obtain a token which could be exchanged for Rs. 2/- worth of Calico cloth, it cannot be said that the visitor paid Rs. 2/- for admission to the Dome. The position of such a visitor is no different from that of a person paying for cloth purchased in a shop. One does not speak of such a person as one paying for admission to the shop. It may be that some persons interested more in the feature of display of fabrics by mannequins than in the purchase of any cloth did not make any purchase and did not cash in the form of cloth the value of the token. Or. again it may be that those making purchases of high value were indifferent to the credit allowable to them on the strength of a token. But because of such vagaries of some visitors, one cannot run away from the facts and hold that the amount paid for the token was a payment for admission to an entertainment within the meaning of the Act. The token of Rs. 2/- obtained by a person visiting the Dome during evening hours was nothing more than a part advance payment towards the purchases that may be made. We do not entertain the slightest doubt that there was no entertainment within the pro....
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....inues its essential character as an entertainment event, the admission for which is payable. The form of payment is the subject matter of Section 6 (6). In the case of sponsorships - of events like the ones conducted by FDCI, the event is sponsored or entirely funded by third parties; the event is per se not for amusement, but primarily for business promotion. Likewise, the sponsorship amounts paid in the other cases (BCCI, GMR, DEN) are not to enable entry of someone to be amused or entertained, but rather to enable visibility of the sponsor's products or services. The placing of hoardings, or advertisements on site cannot be said to form "entry" to an entertainment event. For these reasons, it is held that the levy in this case also fails for absence of a defined and valid collection mechanism. 74. Now, to deal with the revenue's argument that the amendments are merely clarificatory in nature. The revenue relied on Gold Coin Health Food Private Ltd (supra) and Ambae Picture Palace (supra) for this proposition and also urged that the expression "entertainment" was defined in an inclusive manner. So read, Section 6 (6) read with Form 6 had always created a levy and a mechanism. ....
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....tion was inclusive. This argument is unsound. It is settled that there has to be clear authority of law for a valid levy, by reason of Article 265 of the Constitution and the subject of the levy should be precisely or definitely known. This much was said, in Indian Banks Association v Devkala Consultancy Services AIR 2004 SC 2615, when it was observed as follows: "In the event, the contention of the appellants is accepted, the same would give rise to incongruous results. Such an interpretation, as is well-known, must be avoided, if avoidable. Furthermore, a statutory impost must be definite. Having regard to Article 265 read with Article 366(28) of the Constitution of India nothing is realizable as a tax or by way of recovery of tax or any action akin thereto which is not permitted by law." 77. The argument that sponsored events and sponsorship per se were covered by the un-amended Act, is therefore, insubstantial and rejected. The sequitur is that the amendment introduced a new element. By itself, in the absence of change to the enacting part creating a levy, (as discussed previously) the addition of the two impugned explanation, with retrospective effect cannot result in a ....
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....ticket as required under Section 9." Rule 11 requires organizers to submit applications in Form 5 for ticketed events and Form 6 in case of non-ticketed events. While Form 5 under item 8 requires the organizer to disclose "charge for admission to various classes (excluding tax), entertainment tax and surcharge and total payable." Under head 10 and 11 of Form 6 the disclosure include "name of sponsors and the amount sponsored by them" and "name of advertiser and amount received from them" respectively. While submitting application under Form 6, it is not expected from an organizer to pay entertainment tax on sponsorship amounts, an aspect which is otherwise clearly spelt out in Form 5- i.e. entertainment tax paid proportionately on the ticket. 79. The upshot of the above discussion is that in regard to concluded or past transactions, where the organiser or proprietor of the event had no opportunity to collect tax - either because the event was not ticketed (as admission was not paid for) or the entertainment event itself like in sports events, was based on tickets, on which entertainment tax was paid, the requirement of paying amounts, now, on the basis that the past event too....
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....n it was passed. This position is treated as firmly established since the decision of the Federal Court in the case of The United Provinces V.Mst. Atiqa Begum (1). It is also true that though the Legislature can pass a law and make its provisions, retrospective, it would be relevant to consider the effect of the said retrospective operation of the law both in respect of the legislative competence of the legislature and the reasonableness of the restrictions imposed by it. In other words, it may be open to a party affected by the provisions of the Act to contend that the retrospective operation of the Act so completely alters the character of the tax imposed by it as to take it outside the limits of the entry which gives the legislature competence to enact the law; or, it may be open to it to contend in the alternative that the, restrictions imposed by the Act are so unreasonable that they should be struck down on the ground that they contravene his fundamental rights guaranteed under Article 19 (1) (f) & (g)." Yet later in Tata Motors v State of Bihar, 2004 (5) SCC 783 the Supreme Court had to examine the validity of introduction of a provision with retrospective effect, that pa....
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....Court did not elaborate as to how the impugned legislation is merely clarificatory. In that view of the matter, although we recognise the fact that the State has enormous powers in the matter of legislation both prospectively and retrospectively and can evolve its own policy, we do not think that in the present cases any material has been placed before the Court as to why the amendments were confined only to a period of eight years and not either before or subsequently and, therefore, we are of the view that the impugned provision, namely, Section 26 deserves to be quashed by striking down the words "not being waste goods or scrap goods or by products" occurring in the said Section 26 of the Maharashtra Act IX of 1989 and the authorities concerned shall rework assessments as if that law had not been passed and give appropriate benefits according to law to the parties concerned." 80. This Court has concluded, earlier in the course of this judgment, that the amendment is not clarificatory; nor can it be said to introduce a valid levy, because of lack of any amendment to the charging provision; nor is there any valid mechanism to collect such levy. Therefore, the retrospectivity as....
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....visioned for by the event proprietors. As a result, the retrospective effect given to the impugned amendment is void as violative of Articles 14 and 265 of the Constitution of India. (4) The petitioners cannot be said to have waived their right to challenge the levy or collection of amounts as duty in the circumstances of these cases; (5) The amounts collected by the respondents, from FDCI, BCCI, DEN and other petitioners are directed to be refunded to them, with interest @ 7 percent per annum from date of payment, within 8 weeks from today. In the case of GMR, the amounts collected towards sponsorship receipts (as opposed to ticket collections for which tax has been deposited in the normal course) shall be similarly refunded, with similar rate of interest within 8 weeks. 83. All the writ petitions are allowed in terms of the above directions without any order as to costs. OPINION OF DEEPA SHARMA, J. 1. I have had the benefit of reading the judgment of my learned brother Judge. Since I hold different view, I have decided to write a separate judgment:- 2. These are 22 writ petitions. In writ petitions bearing W.P.(C) No.2563/2013, W.P.(C) No.6728/2013, W.P.(C....
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....ax has been introduced with retrospective effect. The sponsorship amount paid or value of goods supplied or services rendered or benefits provided to the organizers of an entertainment programme were never in the tax net and now by this deeming provision, these are considered deemed payment for the admission to an entertainment. This way the legislature has enlarged the scope of Section 2 (m) which cannot be done by adding an Explanation to the main provision, without amending the main provision. The petitioners have also sought the quashing of Explanation 2 of Section 2(m) of the Act. 5. On the other hand, the main contention of respondents is that the definition of Section 2(m) of the Act is inclusive and wide enough to include all the payments made, may it be called by any name and made in any form for tickets or other accommodations in any form in a place of entertainment. It is argued that even before Explanation 2 was added, sponsorship amount received by FDCI for holding fashion shows was subjected to entertainment tax and this Court in earlier writ petition being W.P.(C) No. 1145/2010 titled as Fashion Design Council of India vs. GNCT and Ors., has dealt with this issue ....
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....with the other part of the Statute. The relevant paragraphs are reproduced as under: - "66. The primary principle of interpretation is that a Constitutional or statutory provision should be construed "according to the intent of they that made it" (Coke). Normally, such intent is gathered from the language of the provision. If the language or the phraseology employed by the legislation is precise and plain and thus by itself proclaims the legislative intent in unequivocal terms, the same must be given effect to, regardless of the consequences that may follow. But if the words used in the provision are imprecise, protean or evocative or can reasonably bear meanings more than one, the Rule of strict grammatical construction ceases to be a sure guide to reach at the real legislative intent. In such a case, in order to ascertain the true meaning of the terms and phrases employed, it is legitimate for the Court to go beyond the and literal confines of the provision and to call in aid other well recognised rules of construction, such as its legislative/history, the basic scheme and framework of the statute as a whole, each portion throwing light on the rest, the purpose of the legislat....
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.... keeping in mind the intention of the Parliament for which the Statute has been enacted. The relevant paragraphs are reproduced as under:- "58. The words in the statute must, prima facie, be given their ordinary meanings. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. Nothing has been shown to warrant that literal construction should not be given effect to..... 59. It has to be reiterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention, and therefore the meaning of the statute, is primarily to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand...." (emphasis supplied) 13. The same principles were again reiterated by the Apex Court in Gurudevdatta VKSSS Maryadit v. State of Maharashtra (2001) 4 SCC 534, wherein the C....
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.... the consequences which are likely to flow upon the intended interpretation." (emphasis supplied) 15. From the settled principle of law, it is apparent that, while interpreting a particular provision of a Statute, the grammatical structure of the provisions of the Act has to be given primacy. A particular provision should not be interpreted in isolation, but in context to the object for which that particular Statute has been enacted and the interpretation should further the said object. Where the words used in a Statue are clear and unambiguous, the ordinary grammatical interpretation to those words should be given unless such an interpretation leads to absurdity. 16. In order to determine the issue in hand which essentially relate to the interpretation of Section 2(m) of the Act and the added Explanation 2 to it, it is necessary to understand the scope and object of the whole Act. 17. Section 9 and Section 10 of the Act puts total restrictions on the admission to a place of entertainment of any person unless such person is in possession of a valid ticket or he/she is a person exempted therein. Section 9 and Section 10 of the Act are reproduced as under for convenience:....
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....6. Tax on payment for admission to entertainment- (1) Subject to the provisions of this Act, there shall be levied and paid on all payments for admission to any entertainment, other than an entertainment to which section 7 applies, an entertainment tax at such rate not exceeding one hundred per cent of each such payment as the government may from time to time notify in this behalf, and the tax shall be collected by the proprietor from the person making the payment for admission and paid to the government in the manner prescribed. (2) Nothing in sub-section (1) shall preclude the government from notifying different rates of entertainment tax for different classes of entertainment or for different payment for admission to entertainment. (3) Where the payment for admission to an entertainment together with the tax is not multiple of fifty paise, then notwithstanding anything contained in sub-section (1) or sub-section (2) or any notification issued thereunder, the tax shall be increased to such extent and be so computed that the aggregate of such payment for admission to entertainment and the tax is rounded off to the next higher multiple of fifty paise, and such increased ta....
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....ument or contrivance such person would not get; (iv) any payment, by whatever name called for any purpose whatsoever, connected with an entertainment, which a person is required to make in any form as a condition of attending, or continuing to attend the entertainment, either in addition to the payment, if any, for admission to the entertainment or without any such payment for admission; (v) any payment made by a person who having been admitted to one part of a place of entertainment is subsequently admitted to another part thereof, for admission to which a payment involving tax or more tax is required; (vi) any payment made by a person by way of contribution, subscription, installation or connection charges or any other charges collected in any manner whatsoever for entertainment through direct-to-home (DTH) broadcasting service for distribution of television signals and value added services with the aid of any type of addressable system, which connects a television set, computer system at a residential or non-residential place of subscriber's premises, directly to the satellite or otherwise. Explanation: Any subscription raised, contribution received or donation colle....
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....adesh High Court in Harris Wilson v. State of Madhya Pradesh AIR 1982 MP 171 which had taken a contrary view. 27. The Apex Court again had the occasion to interpret the word 'include' in N.D.P. Namboodripad (Dead) by LRs vs. Union of India (UOI) and Ors. (2007) 4 SCC 502. The Hon'ble Supreme Court, while interpreting the meaning of the word 'include' had reiterated that it should be given the widest possible meaning. The Hon'ble Supreme Court stated in para 18 that, "...it is no doubt true that generally when the word 'include' is used in a definition clause, it is used as a word of enlargement, that is to make the definition extensive and not restrictive...." 28. The Hon'ble Supreme Court in an earlier judgment P. Kasilingam and Ors. vs. P.S.G. College of Technology and Ors. AIR 1995 SC 1395, while discussing the meaning of words 'means' and 'includes' has held as under:- "19....A particular expression is often defined by the Legislature by using the word 'means' or the word 'includes'. Sometimes the words 'means and includes' are used. The use of the word 'means' indicates that "definitio....
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....pact but also those things which the interpretation clause declares they shall include...." (emphasis supplied) 32. Earlier also, the Hon'ble Supreme Court in S.K. Gupta and Anr. vs. K.P. Jain and Anr. (1979) 3 SCC 54, while discussing the meaning and import of word 'include' has clearly held in para 24 of its judgment that "....But where the definition is an inclusive definition, the word not only bears its ordinary, popular and natural sense whenever that would be applicable but it also bears its extended statutory meaning. At any rate, such expansive definition should be so construed as not cutting down the enacting provisions of an Act unless the phrase is absolutely clear in having opposite effect.." (emphasis supplied) 33. It therefore is clear that the fundamental canon of statutory construction is that a literal interpretation is the first and foremost approach. If the words are plain and clear, the Courts must give effect to its ordinary meaning without adding or subtracting anything. It is the grammatical interpretation which is needed to be given to a word used in a provision and the same should be in harmony and consonance with the Statute. 34. I....
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....ion could be in the form of display of products or logo or brand names or permission to put up the advertisement in a place of entertainment, and then if any payment in lieu of such accommodation is made to the organizer, as per this definition, it is payment for admission to an entertainment. 36. This payment could be payment in the form of sponsorship amount. If on account of payment of the sponsorship amount, the sponsors are accommodated to display their products or logo or brand name or put up their advertisements, then this sponsorship amount paid as per definition of Section 2(m)(i) of the Act is payment for admission. This is the only interpretation that can be given to this provision. 37. Sub-clause (iv) of clause (m) of Section 2 of the Act includes within its ambit, any payment made by a person in any form, called by whatever name, may be made for any purpose, connected with the entertainment and if in lieu of that, a person is allowed to attend the entertainment or allowed to continue to attend it, then such payment by virtue of this provision, is payment for admission. The use of the words and expression "any payment, by whatever name called for any purpose whats....
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.... the Act. Similarly, in Section 2(m)(iv) of the Act, the language used by the Legislature, is any payments made, any name given to such payment and given for any purpose which is connected with an entertainment which a person is required to make in any form as a condition of attending or continuing to attend the entertainment, then such payment made in any form is taxable. It could be in the form of providing certain free services or other benefits or any other freebees. Language of Section 2(m) of the Act is wide enough to include the payment made in any form. The conscious use of such wide range language by the Legislature only indicates that it has been used with an object to circumvent the evasion of tax. 41. The said intention can also be seen, in the language used while defining "Admission to an entertainment" in Section 2(aa) of the Act. In this definition, the Legislature has again used the expression includes. The expression 'admission to entertainment' includes "admission to any place in which entertainment is held". While defining the expression "Admission to an entertainment", the Legislature has not used the expression "Admission of a person to a place where....
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...., from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is- (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to sub-serve. (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same." The same principles were reiterated by the Hon'ble Supreme Court in Dipak Chandra Ruhidas v. Chandan Kumar Sarkar (2003) 7 SCC 66. 45. ....
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....s have challenged the levy of tax on sponsorship amounts, alleging that tax on the sponsorship amount was not leviable as per Section 2(m) and it has sought to be brought within the purview of Section 2(m) of the Act by adding Explanation 2 to it and in this way the new tax provision has been added without amending main Section. 48. The undisputed facts are that the FDCI is a registered Society which was established solely for the purpose of promoting and fostering the growth of the Indian Fashion industry. The events so organized by FDCI are non- ticketed events, i.e., entry to the shows organized by it is exclusively by invitation, both for domestic and international buyers, associated professionals and media. It was granted 100% exemption from the liability to pay entertainment tax under the Act in respect of the events held by it for the period 2002-2004. However, for the year 2008-2009, such exemption for holding such events was withdrawn and as a special case, considering the recession in the industry and export sectors and to project Delhi as a world class city, the liability of FDCI to pay the tax, was restricted to 50% of the tax payable. 49. FDCI approached this Cou....
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....ot challenge the findings of AETO that the fashion shows are entertainment events within the meaning of the Act. This Court has dealt with the second contention of the FDCI in para 15 of the said judgment dated 30.04.2012 and observed as under: "15. The second contention put forth before us is that the sponsorship amounts collected by the petitioner cannot be considered as "payment for admission" within the meaning of Section 2 (m) or Section 6 (6) of the Act. It is stated that sponsors make payment of the amounts to the petitioner for sponsoring the Fashion show and there is no stipulation that the amounts are received by the petitioner on condition that some persons will be allowed admission to the Fashion shows without any separate payment for the same. This contention was put forward before the AETO. But he has not chosen to examine the same on the basis of the facts, the agreements between the petitioner and the sponsors. He has examined the question whether the Fashion shows are "entertainment" within the meaning of the Act, an aspect about which there is now no dispute. The AETO has referred to the question whether the sponsorship amount collected by the petitioner repres....
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....ion whether an event of fashion shows is an entertainment within the meaning of Act or not, is a question of facts, to be determined by the concerned authorities in terms of settled principles of law as set out in various pronouncements, including M/s Geeta Enterprises and Ors. (supra), based on evidences and documents produced before it. 55. In M/s Geeta Enterprises and Ors. (supra), the Hon'ble Supreme Court has interpreted the expression 'entertainment' as used in Section 2 (3) of The Uttar Pradesh Entertainment and Betting Tax Act, 1937, which is akin to Section 2(i) of the Act which defines the word 'entertainment' and Section 3 of The Uttar Pradesh Entertainment and Betting Tax Act, 1937, is akin to Section 6 of the Act. In M/s Geeta Enterprises and Ors. (supra),the Apex Court has laid down the parameters to be considered while deciding whether an event is an entertainment or not. The Court has held as under:- "12. Thus, on a consideration of the legal connotation of the word 'entertainment as defined in various books, and other circumstances of the case as also on a true interpretation of the word as defined in Section 2 (3) of the Act, it follows that ....
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....r admission to an entertainment and so taxable. It is the use of video machines located in the place of entertainment and the payment made for the use of such video machines and the profits earned by the organizers, which weighed in the mind of the Court when the Court held that such payments are payment for admission to a place of entertainment. 59. Applying the same analogy where anyone uses a place of entertainment for display of its brand name/logo/products and pays for it in any form, either in cash terming it as sponsorship money or in kind, i.e., by giving some benefits in the form of freebees which could be free goods, free services or other benefits to the organizers and thereby causing profits to the organizers, then such benefits and sponsorship money and payments made is admission to a place of entertainment. It is apparent that in such scenario, the organizers are saving its expenditure on such services while organizing the events and thus earning profits. By virtue of definition of payment for admission in Section 2(m) of the Act, these certainly have to be considered as payments for admission in a place of entertainment. No one can be allowed to evade tax by camou....
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....xecutive and judicial review is limited to examining whether the relevant criteria have been kept in view and whether the decision making process has been just and fair. It is not for Court to examine the correctness of the decision of the executive. The Court can examine only the decision making process. On a perusal of the order passed by the Government of NCT of Delhi on 10.09.2009 and on a fair reading thereof we find that the petitioner has been given a personal hearing to explain its petition for exemption from entertainment tax and thus the rules of natural justice have been adhered to, though Section 14 of the Act does not specifically refer to the grant of a personal hearing. Secondly, all the points raised by the petitioner in support of the claim for exemption have been duly noted in the impugned order and taken into consideration by the competent authority. After taking into account all the relevant criteria and the submissions made by the petitioner, the competent authority has taken a decision to grant exemption to the petitioner from payment of entertainment tax only to the extent of 50% of the tax amount as a special case. In coming to this decision it seems to us t....
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.... do so by the organizers of those events only in lieu of the benefits he has provided to him. To put it otherwise, a person is when accommodated in the manner that he is permitted to display its product/brand name in an entertainment event in lieu of certain value of goods supplied by it or/and services rendered by it or/and the benefits provided to the organizers, then such value of goods supplied and services rendered or benefit provided amounts to payment for admission to such an entertainment and are leviable to tax. Such payments can be said to have been made in these forms, a situation envisaged in Section 2(m) (iv) which includes payments made "in any form". 65. The language of charging Section 6(6) of the Act further clarifies the intent of Legislature that the Section 2(m) of the Act is required to be given the widest possible interpretation to avoid the theft of tax. It is the charging Section and levy entertainment tax on every payment for admission to any entertainment. For the sake of repetition, Section 6(6) of the Act is reproduced herein:- "6. Tax on payment for admission to entertainment- (1) to (5) XXX &nbs....
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....vate Limited (2008) 9 SCC 622, the Hon'ble Supreme Court has clearly held that where a Statue is passed which is clarificatory and explanatory to a former Statute, the subsequent Statue relates back to the time when the prior Act was passed. The relevant paragraphs are reproduced as under:- "18. As noted by this Court in CIT v. Podar Cement (P) Ltd. [(1997) 5 SCC 482] the circumstances under which the amendment was brought in existence and the consequences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so. 19. In Principles of Statutory Interpretation, 11th Edn., 2008, Justice G.P. Singh has stated the position regarding retrospective operation of statutes as follows: "The presumption against retrospective operation is not applicable to declaratory statutes. As stated in Craies and approved by the Supreme Court: 'For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The u....
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....ght to regulate what is to follow, not the past. (See Principles of Statutory Interpretation by Justice G.P. Singh, 9th Edn., 2004 at p. 438.) It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid., p. 440). 14. The presumption against retrospective operation is not applicable to declaratory statutes ... In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended ... An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amen....
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....ment tax at the rate of 15%. As per Rule 25 of the Rules, the tax is to be paid by proprietor on the basis of returns of payment for admission to the entertainment furnished in terms of Section 11 (b) of the Act and thus the organizer is required to pay tax on the basis of return furnished by him. It is argued that Section 15 of the Act requires that on the basis of information furnished by an organization in Form 6, the assessment is to be done and under certain circumstances reasonable opportunity to the proprietor is mandated before passing of the assessment order. The aggrieved person also is provided a right to appeal to the Commissioner against such order. The Act has also made the provision of Appellate Authority whose jurisdiction can be invoked against order of Commissioner. The Act thus provides sufficient mechanism and it cannot be said that there is no machinery provided for charging tax on payments, as envisaged in Explanation, received for admission to an entertainment. 72. I have given thoughtful consideration to the arguments of learned Senior Counsel of the parties. Their arguments in detail on this point are recorded by my learned brother in his order and there....
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.... 3. Name of permanent as well as local address of the proprietor 4. Name and permanent as well as local address of the person who will be responsible for management and for conducting day-to-day business. 5. Approximate period of stay in Delhi 6. Place or places where shows are proposed to be held 7. Date from which shows are proposed to be started 8. Estimate of expenses with details 9. Sources for meeting the expenses 10. Name of sponsors and the amount sponsored by them 11. Name of advertiser and the amount received from them 12. Number of shows to be given daily as well as special shows, if any, and the time of starting of each show 13. Number of seats in each class 14. Total number of each kind of tickets printed for each class for each show 15. Name of place and date, if any, where shows were last held 16. Last serial number of each kind of ticket for each class and for each show issued at last place 17. The amount of security deposit if any, lying with the department if shows were held previously 18. The amount of arrears of tax, if any, to be deposited in respect of shows held previously 19. Manner and criteria of distribut....
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.... be by providing services, giving certain benefits or by supply of certain goods, or lump sum amount termed as sponsorship, the tax is to be levied on such benefits which saves the expenditure of the organizer which he would have otherwise incurred for organizing the event. It certainly cannot be said that there is no charging provision under the Act. 78. Section 6(7) of the Act further clarifies the intention of Legislature to include in tax net the free refreshment and meals provided in an entertainment event. No doubt, this provision is restricted to hotel etc. but when the Act provides levy on such items in clear terms, it cannot be said that the Act provides no method of calculating taxes on such services, goods or benefits or freebees. 79. It is also clear that Form 6, which is meant for non-ticketed events like the one held by FDCI, the organizer of an event is required to furnish wide arena of information like estimate of expenses with details, sources for meeting the expenses, name of sponsors and the amount sponsored by them, name of advertisers and the amount received from them, number of seats in each class, last serial number of each kind of ticket for each class....
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.... in lieu of sponsorship or certain benefits allowed admission which it cannot do except by issue of ticket (Sections 9&10) and ticket also includes passes [Section 2(u)] then even if the entry is free or on concessional rate, by virtue of Section 6(4), the tax is payable on full amount. Since no person can be allowed entry to an entertainment, except on a ticket to such person (due to prohibition of Sections 9 and 10 of the Act) and if anyone in lieu of benefits/services or other benefits and sponsorship amounts, allowed to put up its advertisement and thus allowed admission to a place of entertainment, the tax has to be levied on such benefits, services or sponsorship amount because by virtue of Section 6(4) of the Act, even if the admission is free of charge or on concessional rate. Where the admission is generally on payment, the tax has to be paid as if the entry was on payment of full charge. It therefore cannot be said that the Act does not provide sufficient machinery for levying tax. 84. Harmonious and effective interpretation is needed to be given to the provisions of a Statute, keeping in mind its prime object and the purpose. The Act prohibits the entry to any place o....