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TMI Blog2012 (4) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in all these writ petitions are somewhat common. The petitioner is a society registered under the Societies Registration Act, 1860, established solely for the purpose of promoting and fostering the growth and development of the Indian Fashion industry. It organizes the India Fashion week, business-to-business interaction events and other Fashion shows. It is claimed that these are not ticketed events and that entry to the Fashion shows/ Fashion weeks 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 from the year 2002 to the year 2004; the exemption was reduced to 50% in respect of the events held in the years 2008 and 2009. Thereafter the Government of NCT, Delhi refused the grant of exemption from entertainment tax for all subsequent Fashion events conducted or organized by the petitioner. 3. The petitioner applied for exemption from payment of entertainment tax under Section 14 of the Act regarding Fashion weeks organized by it for the periods from 18.03.2009 to 23.03.2009 and from 15.10.2008 to 19.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Wills Lifestyle India Fashion Week was not "payment for admission to the entertainment" and therefore not chargeable to entertainment tax. This contention was also rejected by the AETO, relying upon the inclusive definition of the term "payment for admission" in Section 2 (m) of the Act. According to him under Section 2 (m) (i), any payment made by a person for seats or other accommodation in any form in a place of entertainment was chargeable to entertainment tax. He also referred to definition of the term "admission to entertainment " in Section 2 (a) of the Act. According to him Section 2 (m) (i) read with Section 2 (a) of the Act covered the case of the petitioner and therefore it was liable to pay entertainment tax in respect of the Fashion show. The AETO also referred to and relied upon sub-sections (1) and (6) of Section 6 of the Act. Sub-section (1) of Section 6 is the charging Section, which charges tax on an entertainment. Subsection (6) says that where the payment for admission to an entertainment is made wholly or partly by means of a lump sum paid as subscription, contribution, donation or otherwise, the entertainment tax shall be paid on the amount of the lump sum a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 6, 7 and 45 to any person or authority subordinate to it. (2) The exercise of any powers delegated under sub-section (1) shall be subject to such restrictions, limitations or conditions as may be laid down by the government from time to time and shall also be subject to control and revision by government at any time." 8. Section 6 is the charging section and it provides for levy of entertainment tax in respect of all payments for admission to any entertainment, other than an entertainment to which Section 7 applies, at such rate not exceeding 100% of the payment as the government may notify from time to time. The sub-section further says that the tax shall be collected by the proprietor of the entertainment from the person making the payment for admission and paid to the government in the prescribed manner. We are not referring to Sections 3, 7 and 45 as they are not relevant in dealing with the argument. The argument of the petitioner is that the power to levy entertainment tax cannot be delegated by the government to any other person or authority subordinate to it and, therefore, the assessment orders passed by the AETO on 11.06.2009 have to be struck down as being without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 112 the Supreme Court pithily observed as under: - "Let us now scrutinize the said machinery to ascertain its scope and ambit. Section 3 of the Income-tax Act is the charging section; it imposes a tax upon a person in respect of his income. As a learned author pithily puts it, "section 3 charges total income; section 4 defines its range; section 6 qualifies it; and sections 7 to 12B quantify it." 13. In Ahmed Ibrahim Sahigra Dhoraji v. CWT, (1981) 129 ITR 314, the Supreme Court summed up the position in the following manner: - "Section 3 of the Indian I.T. Act, 1922 and s. 4 of the I.T. Act, 1961, which are couched more or less in the same language state that where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of the relevant Act in respect of the total income of the previous year or previous years, as the case may be, of every person. Now it is well settled by a series of judicial decisions that the liability to income-tax arises by virtue of the charging section in the relevant I.T. Act and it arises not later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4(1) of the Act, when it also refers to Section 6, amongst other sections, was quite redundant but that is no reason to say that the AETO who merely quantified the charge of tax by passing an assessment order was a delegate of the charge of entertainment tax. What the AETO has done by passing the assessment orders is only to quantify the entertainment tax payable by the petitioner. It is not disputed that the power to pass the assessment order and quantify the entertainment tax can be delegated and there is no prohibition under Section 4(1) of the Act. The contention, therefore, fails and is rejected. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd decide whether the petitioner is liable to pay entertainment tax or not, by passing fresh orders of assessment after hearing the petitioner. 17. So far as the contention of the petitioner against the order dated 10.09.2009 passed by the Government of NCT of Delhi, granting 50% exemption to the petitioner from entertainment tax is concerned, we do not find any strong grounds to quash the same. The power vested in the Government of NCT of Delhi under Section 14 of the Act to grant exemption is based on several criteria. The section is re-produced below for a better understanding of the rationale behind the same: - "14. Exemption (1) The government may, for promotion of arts, culture or sports, by general or special order, exempt any individual entertainment programme or class or entertainments from liability to pay tax under this Act. (2) The government may, by general or special order, exempt in public interest any class of audience or spectators from liability to pay tax under this Act. (3) Without prejudice to the generality of the provisions of subsection (1) where the government is satisfied that any entertainment, (a) is wholly of an educational character, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor shall be liable to pay the tax which would have been payable had not the entertainment been so exempted. (7) The government may for reasons to be recorded in writing grant export facto exemption from payment of entertainment tax is respect of any programme." 18. Before passing the impugned order granting 50% exemption from payment of entertainment tax as against the claim of 100% exemption made by the petitioner, a personal hearing was given on 18.08.2009. There is, therefore, no violation of the rules of natural justice. The petitioner had pointed out that it is a non-profit organization conducting Fashion shows which are not ticketed and for which entry is restricted by invitation only for domestic and international buyers and the media. Material in the form of the web prints have been produced by the petitioner to show the support extended by the governments in UK and France for the various Fashion Weeks. It was pointed out that the Fashion Weeks contribute to the economy of Delhi by way of Hotel bookings, opening of Fashion Restaurants, Seminar Centres, etc. and ultimately the tourism industry benefits from the same. It was claimed that in the past the petitioner was gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the tax amount as a special case. This exemption from payment of tax upto 50% of the tax amount is allowed on the two events i.e. 15.10.2008 to 19.10.2008 and 18.03.2009 to 23.03.2009 which have already been held and the forthcoming Van-Heusen India Men‟s Fashion Week to be held from 11th - 13th September, 2009. It is clarified that this exemption is not extended to future events being planned by FDCI. The Commissioner, Excise, Entertainment & Betting Tax may initiate necessary action as per law. This issues with the approval of Hon‟ble Finance Minister, Govt. of NCT of Delhi." 20. Whether to grant exemption to the Fashion events from entertainment tax or not is a discretionary power granted to the Government of NCT of Delhi. However, the discretion is controlled by the criteria mentioned in the section. Even if the criteria stands satisfied, it is for the government to decide whether full exemption or part exemption is to be given to the petitioner from entertainment tax. The exemption, whether full or part, may also be granted subject to such terms and conditions as the government may deem fit to impose. It appears that essentially it is a matter which is withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other writ petitions, no assessment orders have been passed by the AETO levying entertainment tax on sponsorship amounts collected by the petitioner. However, those writ petitions challenge the orders passed by the Government of NCT of Delhi rejecting the application for exemption from entertainment tax. In line with our decision in W.P.(C) 1145/2010 on this point we uphold these orders and dismiss the writ petitions. We may however add that in case assessment orders are proposed to be passed, the AETO will have to afford adequate and reasonable opportunity of being heard to the petitioner. He should also examine the facts and the sponsorship agreements before passing orders, keeping in view our observations in paragraph 16 above. 23. In these writ petitions, interim directions were issued for deposit of tax as condition for issue of NOC for holding the events. The events were permitted to be held as the petitioners deposited the tax as directed by this Court. In the assessment orders to be passed under Section 15 of the Act, pursuant to the disposal of the writ petitions, the AETO may raise demands including interest, subject to appropriate/ suitable adjustments for tax alr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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