2014 (1) TMI 765 - HC - Indian Laws

Requirement of NOC from Delhi Entertainment and Betting Tax department for the purpose of organizing events or fashion shows - Jurisdiction of Government - Power to insist to obtain No Objection Certificate - Petitioner forced to obtain NOC from the respondent authorities to organise events or fashion shows from time to time - Held that - even in cases where exemption is applied for and is granted, deposit of security can be asked - Act requires and mandates self compliance by the organisers/proprietors. Draftsmen were conscious and aware that after the event, it may be difficult to collect tax dues. Proprietors who hold entertainment shows may leave Delhi or may not be traceable. Respondent authorities would lose tax revenue in case precondition of security deposit is not imposed. Thus, the Act stipulates furnishing of prior information to the Commissioner in the manner prescribed in terms of Section 8(1) and there is a requirement to furnish security before the show is held on self appraisal or as per the directions given by the Commissioner. Commissioner can pass an order prohibiting holding of such entertainment and can take reasonable steps to ensure that order of prohibition is complied with, after giving reasonable opportunity to the proprietor. An order of prohibition can be passed by the Commissioner, if any of the three conditions stipulated in the said sub-section is satisfied. One of the conditions stipulated is when proprietor has failed to deposit the security due. The show can be also prohibited if the proprietor has given any false information which is likely to result in evasion of tax or the proprietor has committed breach of any of the provisions of the Act or the Rules made thereunder - proprietor of every entertainment is required to make payment of tax in accordance with the provisions of Section 11 (b), (c) or (d) of the Act by way of pay order/bank draft into the requisite government account within such period as stipulated. There is no express requirement or stipulation in the Act or the Rules that every proprietor must obtain NOC from the respondent authorities. What is postulated and mandated by the Act is that every proprietor must, before the event is held, furnish the requisite information stipulated under Form 5 or 6 within the prescribed time. The applicant/proprietor at the time of submitting of Form 5 or 6 shall furnish security which may be prescribed, but in case no security is furnished or the security furnished is inadequate, the Commissioner can pass an order under Rules 30 and 31 read with Section 13(1) of the Act. If there is non-compliance of the said order, a further order prohibiting the event can be passed under Section 8(3) of the Act. There is no provision in Sections 8(1), 8 (3), 13 (1) or Rule 30 or 31 that NOC should be obtained for holding an event. What the relevant sections and rules postulate is that the Commissioner can pass an order directing the applicant to furnish security or enhanced security in terms of the Rules - Adjudication or assessment is required to be made under Section 15 of the Act, after organiser/applicant has filed return under Rule 14. At the initial stage, the application made and information furnished is required to be considered and thereupon security as furnished can be accepted or on basis of prima facie or tentative view/opinion, the proprietor can be asked to furnish security, or enhance the security furnished so that in case of a decision or adjudication under Section 15, the tax imposed can be collected and the respondents do not suffer due to non-payment of tax. Concept of single window clearance is not what is postulated and in fact envisaged in the policy. As per the policy, the Delhi Police licensing division requires an organiser to obtain NOC from the different authorities/offices. The policy and the rationale behind it has been explained. It deals with the cases where licenses from Delhi Police have to be renewed each year and hence it is recorded that it would be unduly harsh on the organiser to insist upon obtaining clearance from each agency - Delhi Police can insist that the applicant should furnish details of the application made in Form 5 and 6 under Section 8(1) or (2) before they issue clearance or ask the applicant to state whether he has received any order under Section 13(1) read with Rules 30 and 31 of the Rules. Delhi Police before issuing clearance can make inquiry from the Entertainment Tax Office to ascertain whether there has been compliance of the provisions of the Act - Decided against Appellant.

Summary

Issues Involved:
1. Interim Order Compliance
2. Requirement of No Objection Certificate (NOC)
3. Definitions and Interpretations under the Act
4. Charging Provisions and Tax Levies
5. Information and Security Before Holding Entertainment
6. Exemption Provisions
7. Assessment and Adjudication of Tax
8. Single Window Clearance Policy

Detailed Analysis:

1. Interim Order Compliance
The interim order dated 23rd July 2013 mandated the petitioner to deposit a Fixed Deposit Receipt of Rs. 2.25 lacs as per Rule 30 of the Delhi Entertainment and Betting Tax Rules, 1997. The petitioner was also required to furnish security for the entertainment tax payable on sponsorship money within seven days of receipt. Compliance with these conditions would lead to the release of the security furnished. The petitioner complied with these conditions, and the event took place as planned, rendering the writ petition infructuous concerning prayer clause (a).

2. Requirement of No Objection Certificate (NOC)
The petitioner contested the requirement of obtaining an NOC under the Delhi Entertainments and Betting Tax Act, 1996, and the Rules. The court examined the definitions of "entertainment," "payment for admission," and "proprietor" under Sections 2(i), 2(m), and 2(o) respectively. The court found no express requirement in the Act or the Rules mandating the procurement of an NOC for holding an event. Instead, the Act requires prior information to be furnished to the Commissioner in Forms 5 or 6, along with the necessary security deposit.

3. Definitions and Interpretations under the Act
The court discussed the definitions of "entertainment," "payment for admission," and "proprietor" as provided in the Act. These definitions are crucial for understanding the scope of the Act and determining the applicability of various provisions, including tax liabilities and procedural requirements.

4. Charging Provisions and Tax Levies
Section 6 of the Act is a charging provision that levies entertainment tax on all payments for admission to any entertainment. The tax rate can be up to 100% of the payment for admission. The tax is to be collected by the proprietor and paid to the government. The section also provides for different rates of tax for different classes of entertainment and mandates tax payment even for free or concessional admissions.

5. Information and Security Before Holding Entertainment
Section 8 requires prior information to be given to the Commissioner before holding any entertainment on which tax is leviable. Form 5 is used for ticketed events, and Form 6 for non-ticketed events. The Commissioner can prohibit the event if the proprietor fails to deposit the required security or provides false information. Rules 30 and 31 detail the manner and amount of security to be deposited, which can be up to the total tax chargeable for full house capacity.

6. Exemption Provisions
Section 14 allows the government to exempt certain entertainment programs from tax for promoting arts, culture, or sports. The exemption can be granted on a case-by-case basis or for a class of entertainments. Rules 35 and 36 outline the procedure for applying for and granting exemptions, including the requirement to furnish security and submit detailed accounts post-event.

7. Assessment and Adjudication of Tax
Section 15 provides for the assessment of tax by the assessing authority. The authority can assess the tax due if the proprietor fails to provide required information, submit true and full returns, or evades tax. The assessment is subject to appeal, and penalties up to twice the tax due can be imposed. The court clarified that Section 15 is the sole provision for tax assessment, and the Commissioner's role under Section 13 is limited to determining the security deposit, not final tax assessment.

8. Single Window Clearance Policy
The court addressed the single window clearance policy of the Delhi Police, which facilitates obtaining NOCs from various authorities, including traffic, fire, electricity, and entertainment tax offices. The court clarified that while the Delhi Police can require details of applications made under Forms 5 and 6, the Entertainment Tax Office is not mandated to issue an NOC. Instead, the office can direct the furnishing of security and prohibit events for non-compliance.

Conclusion
The court concluded that the Act and Rules do not mandate obtaining an NOC from the Entertainment Tax Office for holding an event. The requirement is to furnish prior information and security as prescribed. The writ petition was disposed of with no order as to costs.