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TMI Blog2014 (1) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner 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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2013 - SANJIV KHANNA AND SANJEEV SACHDEVA, JJ. For the Appellant : Sandeep Sethi, Rajiv Bansal, Jitendra Singh, Saurabh S. Sinha, Ms. Anushree Kapadia and Ms. Rashmi Singh. For the Respondent : Parag Tripathi, Ms. Ruchi Sindhwani, Ms. Bandana Shukla and Ms. Megha Bharara. ORDER:- Sanjiv Khanna, J. On 23rd July, 2013, the following interim order was passed in this writ petition filed by Fashion Design Council of India: (i) The petitioner has deposited a Fixed Deposit Receipt of ₹ 2.25 lacs as provided in Rule 30 of the Delhi Entertainment and Betting Tax Rules, 1997. (ii) As and when the petitioner receives sponsorship money, he shall furnish security in terms of Rule 30 on the entertainment tax payable thereon within a period of seven days from receipt of the sponsorship money. (iii) The petitioner will also pay on sponsorship money tax as per Rule 25 and/or any other rule applicable as per the time stipulated. (iv) On the payment of taxes, the security furnished will be released. (v) In case there is any lapse or fault, the respondents can proceed in accordance with the Delhi Entertainment and Betting Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) any payment for cable service; (iii) any payment made for the loan or use of any instrument or contrivance which enables a person to get a normal or better view or hearing or enjoyment of the entertainment, which without the aid of such instrument 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; 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainment tax for different classes of entertainment or for different payments for admission to entertainment (3) Where the payment for admission to an entertainment together with the tax is not a 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 extend and be so computed that the aggregate of such payment for admission to entertainment and the tax is round off to the next higher multiple of fifty paise, and such increased tax shall also be collected by the proprietor and paid to the government in the manner prescribed. (4) If in any entertainment, referred to in sub-section (1), to which admission is generally on payment, any person is admitted free of charge or on a concessional rate, the same amount of tax shall be payable as if such person was admitted on full payment. (5) Where the admission to a place of entertainment is generally on payment, and if any entertainment is held in lieu of the regular entertainment programme without payment of admission or with payment of admission less than what would have been paid in the normal co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose, in Rule 11 of the Rules, Form 5 and 6 have been prescribed. The said Rule reads as under: 11. Form and manner of information before holding an entertainment A person or society desirous of holding an entertainment shall submit to the Commissioner an application in Form 5 where it is a ticketed programme and in Form 6 where the admission to the entertainment is exclusively by invitation, at least seven clear days before the date of such entertainment: PROVIDED that, the Commissioner may accept the application at a shorter period if he is satisfied that there were cogent grounds or difficulties for not submitting the application earlier and there is sufficient time for depositing the security, getting the tickets attested, obtaining Form 7 register and for completing other necessary formalities before starting the show. 12. A reading of the aforesaid Rule elucidates that in cases of ticketed programmes/events, information in Form 5 has to be submitted and in cases of non-ticketed programmes/events, information in application Form 6 has to be submitted. The said information has to be provided at least seven clear days before the date of such event i.e. holid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posit security in such a manner as may be prescribed. The Commissioner can deduct arrears of tax from the security and may vary or forfeit the security in a manner as prescribed. Sub-section (2) postulates that no order of forfeiture of security under sub-section (1) could be made before giving reasonable opportunity of hearing to the proprietor or applicant. It stipulates that Commissioner can order forfeiture of security for reasons to be recorded upon satisfaction that the proprietor has evaded tax or violated the provisions of the Act or Rules made thereunder. An order under sub-section (1) and (2) is appealable within 30 days before the appellate authority in such a manner as may be prescribed and the order of the appellate authority shall be final. It is noticeable that sub-section (2) is only applicable in cases of an order forfeiting the security and not to any other order. 15. Rules 30 and 31 are also relevant and read: 30. Manner of depositing security. The proprietor is required to deposit security under sub-section (1) of section 13 of the Act shall furnish a security in the form of bank draft or pay order or bank guarantee or a fixed deposit receipt, for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (l) where the government is satisfied that any entertainment, (a) is wholly of an educational character; or (b) is provided partly for educational or partly for scientific purposes by a society not conducted or established for profit; or (c) is provided by a society not conducted for profit and established solely for the purpose of promoting public health or the interests of agriculture, or a manufacturing industry, and consists solely of an exhibition of articles which are of material interest in connection with questions relating to public health or agriculture or are the products of the industry for promoting the interest whereof the society exists, or the materials, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner with necessary proof as also the particular clause of sub-section (3) of section 14 of the Act under which exemption is sought: PROVIDED that an application may be admitted after the expiry of the period thereof, if the applicant satisfies the Commissioner or any other office authorised by him that he had sufficient cause for not preferring the application within that period. (2) The Government may grant exemption on such terms and conditions as it may deem fit to impose in the particular case. (3) Where exemption is granted a certificate shall be issued to the applicant by the Commissioner or any other officer authorised by him and the same shall, on demand be produced before an inspecting officer. The proprietor shall comply with the condition stated 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 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with the vouchers, if so required by the Commissioner, within fifteen days from the date of the entertainment. (6) The proof of utilisation of the entire gross proceeds for philanthropic, religious or charitable purposes shall be furnished by the proprietor of the entertainment within thirty days from the date of entertainment in such manner as may be required by the Commissioner: PROVIDED that if the proprietor satisfies the Commissioner that he had sufficient reasons for not submitting the proof of utilisation within the period prescribed, the Commissioner may extend the period of time to extent as he may deem fit. 19. A reading of the aforesaid Rules indicates that even in cases where exemption is applied for and is granted, deposit of security can be asked. 20. The reason why we have reproduced in detail the provisions of the Act and the Rules is to highlight the scheme of the Act and object and purpose behind the provisions. The 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 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above it neatly under the signature of manager. No erasion or over-writing in the Form 7 shall be made. (5) Contravention of sub-rules (2), (3) and (4) shall, unless proved to the contrary, be deemed to be the evasion of tax. 23. Sub-rule (5) is important and stipulates that contravention of sub-rules (2), (3) and (4) unless proved to the contrary shall be deemed to be evasion of tax. The time limit for submission of Form 7 is stipulated in Rule 16. Rule 17 postulates preparation and submission of statement in Form 8, where any programme or synopsis is sold by the proprietor. 24. Rule 25 relates to payment of tax and stipulates as under: 25. Payment of tax. (1) Proprietor of every entertainment required to make the payment of tax in accordance with the provisions of clause (b), (c) or (d) of section 11 of the Act shall deposit the amount of tax into government account in the form of pay order/bank drafts within four days from the last day of each week ending with Thursday or within such period as may be specified for the purpose by the Commissioner and which shall correspond with the period prescribed under rule 16 for submission of Form 7 statements: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Any person aggrieved by an order under sub-sections (1) and (2) may, within one month from the date of service of such order, prefer an appeal to the Commissioner in such manner as may be prescribed. (4) An appeal shall lie from an appellate order of the Commissioner passed under sub-section (3) to the appellate authority within one month from the date of service of such order, in such manner as may be prescribed, and the order of the appellate authority shall be final. 27. Clause (d) of sub-section (1) to Section 15 is broad and includes cases where tax had been fraudulently evaded or attempted to be evaded. It covers cases of payment of tax due in any manner whatsoever. Clause (b) refers to cases where the proprietor has failed to submit full and true return. A return may be full but not true or true but not complete. Clause (b) will come into operation in either case. An order of assessment is to be passed after giving reasonable opportunity of hearing to the proprietor. The words best of its judgment does not refer to best judgment assessment as we understand under the Income Tax Act, 1961 as it postulates hearing the party. It means and requires passing of an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be submitted, but in a case covered by Section 8(1) prior approval is not required. What is required is furnishing of information in terms of Section 8(1) in Form 5 or 6. Thereupon, the Commissioner is entitled to pass an order prohibiting the event under Section 8(3) in case the proprietor has not furnished security or the security furnished is inadequate. An order for furnishing security is mandated and required, as noticed above, under Section 13(1) read with Rules 30 and 31. 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. 29. The security furnished is provisional and is subject to the final determination which takes place under Section 15, which provides for final assessment of tax. All persons, who hold entertainment, are required to file return as mandated under Rule 14 and other rules. Return under Rule 14 should be filed as per the time stipulated therein. Sub-Rule (5) to Rule 14 creates a deeming provision under whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se it is postulated in Section 15. We do not think delegated legislation in form of Rules 30 and 31 can be regarded and treated as the statutory provision empowering Commissioner to determine and decide the question of levy or exigibility of tax. It is difficult to accept that the main enactment i.e. the Act is silent and does not provide for decision on the said core questions and the question of exigibility or levy of tax is left out and not provided, but under the delegated legislation the said adjudicatory provision has been made. 32. 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. 33. Learned counsel for the respondent during the course of hearing ..... 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