2012 (4) TMI 730 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Delegation of powers u/s 4 of the Delhi Entertainment and Betting Tax Act, 1996.
2. Definition and applicability of "payment for admission" u/s 2(m) and Section 6(6) of the Act.
3. Exemption from entertainment tax u/s 14 of the Act.

Summary:

Delegation of Powers u/s 4:
The petitioner argued that the power to levy entertainment tax cannot be delegated by the government to any subordinate authority, thus making the assessment orders by the Additional Entertainment Tax Officer (AETO) invalid. The court clarified the distinction between the levy or charge of tax and its quantification, noting that the charge of tax is created by the statutory provision itself and does not require a separate order. The AETO was merely quantifying the tax, which is permissible under the Act. Hence, the contention was rejected.

Definition and Applicability of "Payment for Admission" u/s 2(m) and Section 6(6):
The petitioner contended that the sponsorship amounts should not be considered as "payment for admission" within the meaning of the Act. The AETO had not examined the terms of the sponsorship agreements but relied on the inclusive definition of "payment for admission" in Section 2(m). The court held that the AETO should have examined the sponsorship agreements to ascertain the true nature of the payments. Consequently, the assessment orders were quashed, and the AETO was directed to re-examine the facts and agreements before passing fresh orders.

Exemption from Entertainment Tax u/s 14:
The petitioner sought 100% exemption from entertainment tax, which was reduced to 50% by the Government of NCT of Delhi. The court noted that the power to grant exemption is discretionary and based on multiple criteria. The government had considered the petitioner's submissions and financial health before deciding to grant only 50% exemption. The court found no irregularity or irrationality in the government's decision-making process and upheld the order granting 50% exemption.

Conclusion:
The court quashed the assessment orders by the AETO and directed a re-examination of the sponsorship agreements. However, it upheld the government's decision to grant only 50% exemption from entertainment tax, finding no grounds for interference. The writ petitions challenging the assessment orders were allowed to the extent indicated, while those challenging the exemption orders were dismissed.