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TMI Blog2017 (12) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 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. Whether as a fashion development and promotion society, which conducts fashion shows provides entertainment by hosting such shows? - Whether payment for admission includes sponsorship? - the events are non-ticketed events where entry is by special invite of the organizers Dissent Decision - Both the Judges delivers different judgments. In one view, no entertainment tax can be collected and allowed the writ petitions. Another view is that entertainment tax can was rightly demanded and dismissed the appeal of the writ petitions. - W.P.(C) 2563/2013 W.P.(C) 6728/2013, C.M. APPL.14592/2013 W.P.(C) 4792/2014, C.M. APPL.9548/2014 W.P.(C) 6767/2014, C.M. APPL.16010/2014 W.P.(C) 2825/2015, C.M. APPL.5077/2015 W.P.(C) 2886/2015, C.M. APPL.5179/2015 W.P.(C) 3247/2015, - - - Dated:- 22-12-2017 - MR. S. RAVINDRA BHAT MS. DEEPA SHARMA JJ. W.P.(C) 2563/2013 W.P.(C) 6728/2013, C.M. APPL.14592/2013 W.P.(C) 4792/2014, C.M. APPL.9548/2014 W.P.(C) 6767/2014, C.M. APPL.16010/2014 W.P.(C) 2825/2015, C.M. APPL.5077/2015 W.P.(C) 2886/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in W.P.(C)7495/2014, 5994/2016 9661/2016. Ms. Meera Bhatia, Advocate for UOI in all matters. S.RAVINDRA BHAT, J. 1. This batch of writ petitions challenge the vires of the second explanation to Section 2(m) of the Delhi Entertainment and Betting Tax Act ( DEBT Act or the Act ), introduced with retrospective effect from 01.04.1998 by amendment (Notification No. F.14(9)/LA-2012 /CONS 2 LAWW/148 hereafter impugned notification or impugned amendment ) dated 01.10.2012. Section 2(m) defines payment for admission and through the impugned provision payments made in lieu of advertisements commensurate to (i) sponsorship (ii) value of goods supplied and (iii) value of services rendered were included. All the petitioners seek directions that the exaction of these amounts as tax is unenforceable and in some cases, seek refund of amounts paid under protest. They also impeach the retrospective operation of the amendment, through the impugned notification. Brief Facts 2. The petitioner in WP 2563/2013, Fashion Design Council of India (hereafter FDCI ) is a registered society created for the purpose of promoting and developing the Indian fashion industry espec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air press conferences with CEL at conference backdrops; Logo placement in all invites, accreditation passes, official brochure, official website or, other media coverage etc.; 11. Right to use pictures of designers; 12. Right for television interviews etc. All such rights are towards organizing the event and do not guarantee the sponsor/ partner any assured invites to the event in exchange for their contribution to the event. In other words, the sponsor may or may not be given an invite to view the event and their role may be limited to advertising their products/ services. 4. FDCI s events styled as fashion shows, were sought to be classified as entertainment events by the respondents to attract tax liability under the Delhi Entertainment and Betting Tax Act ( the Act ). The Act came into force on 01.04.1998 brought to tax, payments made for admission to a place of entertainment. Believing that its fashion shows were entertainment events, FDCI had applied for exemption under the provisions of Section 14 of the Act; the then Joint Secretary (Finance) acting at the behest of the Government of National Capital Territory of Delhi (GNCTD) granted 100% entertainment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the meanwhile, amended Section 2 (m) of the Entertainment Tax Act by adding two explanations and took the position that these provisions were clarificatory; the amendments were inserted on 1 October 2012 but brought into force with effect from 01 April 1998. These amendments are the subject matter of challenge in the present writ proceedings. Petitioners arguments 5. FDCI argues that the sponsorship amounts received by it are for the purpose of organizing its events and in no manner can they be classified as payment for admission . It is urged that the impugned explanation is contrary to the Constitution of India as well as ultra vires the Act. It is argued that the impugned explanation, through a deeming fiction seeks to include sponsorship amounts paid for organizing an event into the same bracket as payment for admission. According to FDCI, the power of a State legislature under Entry 62 of List II of the Seventh Schedule of the Constitution is to levy taxes on luxuries including entertainment . . This does not extend to amounts paid for sponsorship, which by its nature is towards organizing the event. FDCI argues that the taxing incidence under the Entertainment T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Entertainment Tax Act. The Counsel submits that though the products promoted fall under the class of luxury goods and these brands may relate to different products, yet they may all be co-advertised and promoted in the same event. In such situations, promoters are not entertainers but build their brands and create awareness of their designs in the country. By introducing a tax liability on sponsorship what the legislature is taxing advertisement, which is beyond the legislative ambit of the state legislature under Entry 62, List II of the Seventh Schedule of the Constitution. The learned counsel refers to Entry 92 of List I to seventh schedule ( 92. Taxes on the sale or purchase of newspapers and on advertisements published therein ). It is submitted that advertisement of the kind visualized in the events, would be also within the Union List, because of Entry 97 of List I to the Seventh Schedule. What cannot be directly cannot be done indirectly, i.e. taxation on advertisement by a state. It is submitted that since the sponsorship is by way of advertisement, that cannot be taxed, its inclusion through the amendment, which is impugned in the present proceedings, is beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises (2001) 4 SCC 60 , where it was held that incidence of tax is on entertainment and consequently on the person availing such entertainment. In the absence of a rational nexus between the payment made for admission by a recipient of the entertainment vis- -vis a sponsor s contribution and also by treating similarly two distinct classes of persons i.e. sponsors organizing an event and persons availing the entertainment, the petitioner argues that the impugned amendment falls a foul Article 14 of the Constitution. Sponsorship agreements are a separate class of payments entered into between private parties for organizing an event. By applying Section 6 to such payments by virtue of the impugned explanation, the Entertainment Tax Act clearly violates Article 14 of the Constitution. To this extent, the petitioner relies on the decision of the apex court in Kunnathat Thatunni Mupil Nair v State of Kerala AIR 1961 SC 552 wherein two propositions were laid down in respect of taxing statutes: firstly that the legislature must be competent to levy the tax and authorise its collection and secondly it should fulfill the obligations spelt out in Article 13 and 14 of the Constitution whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislature is incompetent to add the impugned Explanation and increase the scope of tax. Reliance has also been placed on Sri Prithvi Cotton Mills Ltd. Vs. Broach Borough Municipality Ors, AIR 1970 SC 192 . It urges that for there to be a taxing incidence there needs to be an identifiable payment, which secures the right to admission into a place of entertainment. It is further argued on this ground that both the charging section as well as the pre-amendment Section 2(m) taxes any payment by a potential recipient of the entertainment for securing admission to an entertainment. For any event, which can be classified as entertainment under Section 2(i) the recipient forms a separate class of people in comparison to the organizers; sponsors are nothing but proprietors covered under Section 2(o)(i) of the Entertainment Tax Act. FDCI argues that by inserting the second Explanation to Section 2(m), the state, seeks to change the object of the Act by enlarging the scope of the charging section by including even sponsors who are but organizers. Relying on the scheme of the Act with respect to Section 6(1), it is argued that no tax can be levied when there is no payment for admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses to conduct and manage the event. As identity cards ( ID Cards ) allow their holders to enter the premises and are neither tickets nor entry to the entertainment event, the criteria prescribed under Sections 9 and 10 would be fulfilled. Sections 9 and 10 mandate that no person can enter the premise where the entertainment event is to be conducted without a valid entry ticket with duly paid tax on it whereas persons entrusted with ID cards to the event are cleared for access to the premise at any time and are charged with specific duties in connection with the event including overseeing the organizing of the event. Since sponsors have specific duties like manning stalls and displaying goods it cannot be said that they are receiving entertainment; they are only giving effect to the sponsorship agreement. In terms of Sections 9 and 10 of the Entertainment Tax Act, sponsors are neither spectators nor audience. 14. It is also argued by the learned senior counsel that the impugned amendment seeks to enlarge the taxing incidence has legislated beyond its competence. While admittedly legislative entries under Schedule VII to the Constitution are to be given wide interpretation, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... write the entire levy through amendment of the definition clause, without any corresponding levy, and furthermore, in the absence of a coherent machinery for assessment, collection and recovery, the legislature has acted contrary to Article 265 and Article 14 of the Constitution of India. Contentions of BCCI 15. In WP(C) of 10729/ 2016, the petitioner, Board of Control for Cricket in India (BCCI) created the Indian Premiere League tournament (IPL), a cricket tournament played yearly in the T-20 format since 2007. IPL matches in the tournament take place in different locales in stadiums across the country during the season. BCCI grants franchisee rights to various entities to form their teams and compete against other teams. The franchisees also negotiate with the owner of the stadiums for the purpose of securing their home stadium. Once permission to use a stadium as home stadium is granted, the franchisee inter alia is entitled to host its team s home matches and retain proceeds from sale of tickets for those matches. BCCI entered into franchisee agreements with GMR Sports, which owns the Delhi Daredevils team and is proprietor of the matches conducted in Delhi. GMR e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also retained solely by GMR. The Franchisee has been treated as the proprietor for all matches held in Delhi. It is the Franchisee/GMR who has been filing the entertainment tax returns. 17. It is argued by Mr. Sawhney that GNCT of Delhi has throughout treated only the Franchisee as the proprietor of the sporting event. It is submitted that the nature of the entertainment in question i.e. cricket matches held, at Delhi has not changed. It is argued that someone else cannot become the proprietor merely because an additional head in the form of sponsorship is sought to be taxed. The proprietor always was and remains the franchisee i.e. GMR. It is urged that the notices by the GNCTD proceed on the erroneous basis that the BCCI is deemed to, be proprietor' in terms of the Act merely because the BCCI is connected with the organization of the IPL T20 matches held at the Stadium since 2008. It is submitted in this context that various provisions of the Act apply when there is access to those wishing to be entertained, for an event, that may be called entertainment . Whereas access to those seeking entertainment is granted through tickets, for which the event proprietor is GMR (who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off Matches at the Ferozshah Kotla Stadium on 25.05.2016 and 27.05.2016. It states that it had to deposit the entire entertainment tax payable on the sale of 36,008 seat tickets as well as on the sponsorship amounts despite the Entertainment Tax Act under Sections 8 and 13 requiring only a security deposit to be made for the purpose of receiving an NOC. BCCI has sought directions for quashing of the impugned amendment and consequently refund of the tax paid under protest by it on the sponsorship amounts. 20. In another Writ Petition - 4966/ 2013, BCCI has challenged the notice dated 14.01.2013 issued by the respondent which seeks to tax BCCI for sponsorship amounts received by it. That notice was in relation to IPL matches held in 2012 at Ferozeshah Kotla stadium. The notice observed that certain sponsors including DLF, City Bank, Hero, Vodafone, Volkswagen and Karbonn had entered into sponsorship agreements with BCCI and not GMR and therefore required BCCI to pay the entertainment tax due. This notice was challenged before this Court and consequently stay was granted in respect of the demand on 05.08.2013. 21. It is urged by Mr. Sawhney, for BCCI, that on site advertisements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ticketed basis. The per rate ticket including the number of tickets was specified in the said order. That order was subject to certain terms and conditions and one of the conditions was that DEN had to submit the details of new sponsors added along with Entertainment Tax payable on sponsorship amounts. DEN had by letters dated 27.08.2014 and 4.09.2014 applied for exemption under Section 14, from application of the Entertainment Tax Act; however the respondents did not reply. DEN, in these circumstances, challenges the notification and the amendments on the same grounds urged by BCCI. Respondent s Arguments 23. The respondent states and its senior counsel, Mr. Parag Tripathi, firstly urges that all the events organized by FDCI are in the nature of entertainment events and payments received by them, including sponsorships, for such entertainment have always been taxable under the Act. The fact that FDCI accepted its liability to pay entertainment tax for payments received for earlier shows is further strengthened by the conduct of the petitioner, which had previously sought exemption from payment of entertainment tax under Section 14 of the Entertainment Tax Act. FDCI had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... West Bengal Vs. Purvi Communications (2005) 3 SCC 711 to contend that the legislature can choose the person it seeks to collect the tax levied on entertainment. Even in the current case, counsel highlights that the tax is on the entertainment and is well within the ambit of Entry 62 of list II. It is urged that sponsorship amounts have always been taxable under the Entertainment Tax Act as well as the Rules; Rule 11 at Serial no. 10 requires an organizer of the event to give the names of all the sponsors along with the amount sponsored. This declaration too, according to senior counsel, suggests that sponsorship amounts were always subject to entertainment tax. In essence, it is argued that any person, for any payment whatsoever made in connection with an entertainment place shall be deemed to make a payment for admission and accordingly the provisions of the DEBT Act would apply. 26. The revenue urges that the petitioner is mistaken in bracketing advertisement and sponsorship together and that such grouping flies in the face of logic. Counsel urges that while sponsorship and advertisement both may give the end result of brand publicity, unlike advertisement, in case of sponso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an event, the costs are borne by it. This is then made up for in generally the following ways: (i) Income from sale of tickets (ii) Amount received from sponsors/ advertisers. (iii) Amount received from sale of tickets as well as sponsors (iv) income from own sources. The revenue urges that in the first three categories any payments made are taxable whereas only in the fourth kind i.e. where the proprietor funds the event out of his/ her own sources would it be beyond the scope of taxability. It is urged that the proprietor collects payments from other sources including the persons attending the event, sponsors/ advertisers etc. all of whom, in lieu of the payment are given the permission to either watch the event or place banners/ logos or in certain cases (like sponsors) given the permission to bring their clients/ employees to enjoy the entertainment event. In respect to such payments if the petitioner s contention is accepted then it would create ample opportunity for organizers like the petitioner to evade tax. Similarly in case of IPL and the T-20 matches, which are mega events in terms of both outreach and costs, the mainstay of the organizer s fund is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sponsorship as a mode facilitating entry to an entertainment event is within the legislature s powers. It is submitted that the expression 'admission to entertainment' is not confined to right to seats only but also includes other accommodation at an entertainment event. Because of the inclusive nature of the definition in the Act, the term 'admission to entertainment is wide enough to cover participation in the event of the type done by the sponsors, associate partners etc. Learned senior counsel submitted that there is nothing abhorrent or inherently repugnant in the idea of expanding the natural meaning of the word for taxation purposes and courts, in several decisions, have accepted the introduction of such legislative devices. 30. The revenue argues that it has been collecting entertainment tax from sponsors right from the inception of the Entertainment Tax Act including the One Day Cricket matches organized by Delhi District Cricket Association (DDCA), T-20 IPL Match organized by M/s. GMR Ltd. and various other live concerts being conducted in the city. Furthermore, the revenue contends that no new tax has been demanded and the petitioner has only been ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Tax Act was enacted with the purpose of subjecting to tax any entertainment organized or provided for in the National Capital Territory of Delhi. An entertainment is any performance or show, which gives pleasure, or a show, organized for the purpose of providing enjoyment to some or to a group of people. The scheme of the Act defines entertainment in the widest manner. It is not restricted to merely cinema shows, dramatic or musical performances or other conventional forms of entertainment. While no standard definition exists to describe the constituent elements of entertainment, some Acts which are pari materia, such as the Uttar Pradesh Entertainments and Betting Tax Act define entertainment under Section 2(g) to include any exhibition, performance, amusement, game, sport or race (including horse race) to which persons are admitted for payment and in the case of cinematograph exhibitions, includes exhibition of news-reels, documentaries, advertisement shorts or slides, whether before or during the exhibition of a feature films or separately; . The Bombay enactment is phrased similarly. The Entertainment Tax Act defines entertainment under Section 2(i) as: entertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew the show was collected, however in order to operate the machine for 30 seconds, the user would have to insert a 50 paisa coin into the machine which was later collected from by the manufacturer of the machine and a certain portion of the collection went to the petitioner. The court held that the levy of entertainment tax applied in the facts of the case. The respondents have also relied on the decision of the Bombay High Court in The Gem and Jewellery Export Promotion Council Vs State of Maharashtra [2013] 59 VST 129 (Bom ) which involved an event organized by a jewellery promoting company which scheduled annual exhibitions for promoting export and trade of jewellery and gems and prospective buyers allowed entry through invitations. The High Court refused to grant relief and deemed the exhibitions to be entertainment events within the ambit of Bombay Entertainment Duty Act on an application of the tests prescribed in Geeta Enterprise (supra). A significant feature - which persuaded the High Court in that instance, to hold that the event constituted entertainment was that considerable and substantial registration fees was collected from participants. 36. This Court is una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court upheld the view of the High Court that the show put up was a device and subterfuge with the intention of evading provisions of the Entertainment Tax Act in that state. The court upheld the finding that there was no evidence to show and therefore it was difficult to believe that the fashion show was held merely to attract students. An affirming judgment, the decision did not cite any authority. Nor did it advert to Geeta Enterprises (supra) and the various tests indicated by courts. 37. At this stage, it would be essential to extract the relevant provisions of the Entertainment Tax Act applicable in this case. Section 2(i) defines the term entertainment it reads as follows:- (i) entertainment means any exhibition, performance, amusement, game, sport or race (including horse race) or in the case of cinematograph exhibitions, cover exhibition of newsreels, documentaries, cartoons, advertisement shorts or slides, whether before or during the exhibition of a feature film or separately, and also includes entertainment through cable service; Section 2(m) of the Act, after amendment with effect from 1st October, 2012 reads as under:- (m) payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission 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 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 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 subsection (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proprietor has given any false information which is likely to result in the evasion of tax; (b) the proprietor has failed to deposit the security due; (c) the proprietor has committed breach of any of the provisions of this Act or the rules made thereunder. 39. Sub-section (1) to Section 8 of the Act stipulates that no entertainment on which tax is leviable shall be held without prior information to the Commissioner in the prescribed form. It mandates furnishing of prior information by a person who wants to hold entertainment on which tax is leviable. 40. The exemption provision is in Section 14 of the Act, which reads:- Section 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 sub-section (l) where the government is satisfied that any entertainment,- (a) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption so granted and thereupon the proprietor 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. 41. The above provision authorises the GNCTD to exempt certain classes of programmes from part or full payment of entertainment tax. The conditions inter alia, include those for submission of documents and records can be imposed. Rules 35 and 36 prescribe the procedure, which should be followed for availing exemption under Section 14 of the Act. Rules 35 and 36 are as under: 35. Exemption by Government under section 14(3) of the Act (1) An application for exemption under sub-section (3) of section 14 of the Act shall be presented to the Commissioner at least fifteen days before the proposed date of entertainment stating the full description and nature of entertainment and any other details which may be required by the Commissioner with necessary proof as also the particular clause of sub-section (3) of section 14 of the Act under which exemption is sought: PROVIDE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment is satisfied it may grant the exemption after taking such security as it may consider necessary to secure payment of the due tax in case the exemption is cancelled under sub-section (6) of section 14 of the Act. (4) Where exemption is granted a certificate shall be issued to the applicant by the Commissioner or the officer authorised by him and the same shall, on demand, be produced before an inspection officer. (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 within fifteen days from he date of entertainment full and true account of the ticket issued at different rates and the gross amounts 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, within fifteen days from the date of the entertainment. (6) The proof of utilisation of the entire gross proceeds for philanthropic, religious or cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to the see the world of exotic fashion in Gorakhpur. The issue at hand is different- FDCI sends out the invites to potential buyers and does not advertise its invite. Unlike in the case of Amit Kumar (supra) wherein a competitive pageant was held to decide Mr. and Mrs. Gorakhpur, FDCI s events are organized by a group of industry experts with the aim of furthering their business. FDCI s events are business and trade promotion events, entry to which cannot be categorized as entry to entertainment for the simple reason that those attending the shows are not deriving any pleasure or amusement. They are witnessing the show simply to further their business interests. If FDCI s events were to be classified as entertainment shows, the reasons for classification would have to then be applied to various trade shows like the automobile exhibitions or defence shows where products are showcased at high end venues to a niche clientele for the prospect of furthering the respective industries. When prospective buyers from the industry attend these events, for free based on a special invite, it would be fallacious to assume that they are being entertained. Whether payment for admission in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation 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 product/ brand name or otherwise shall be deemed to be payment for admission; 47. The explanation to Section 2(m) was added on 21.09.2012 and given retrospective effect from 01.04.1998. Prior to the amendment a single explanation to Section 2(m) covered 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; . 48. A plain reading of the provisions would show that the new amendment seeks to tax sponsorship amounts. To test the vires of the amendment it is important to ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 supress 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. 50. An explanation, therefore, cannot widen the scope of the original provision and definitely not as a tactic, which would be at conflict or odds with the main enactment or the existing provision. It may be used to advance the scope of the Act or to suppress a mischief. In this background, it is necessary to put to test the scope of the Explanation in the context of the object and effect of the Entertainment Tax Act. The Entertainment Tax Act was enacted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned legislation is one, which is beyond the field of legislation allotted to the State, then the Court is well within its power to strike down such enactment as ultra vires the Constitution on the ground of legislative incompetence. 52. Taxing statutes are distinct. While testing for legislative competence as noticed under Article 248(2) as well as in Hoechst Pharmaceuticals Ltd. Vs State of Bihar (1983) 4 SCC 45 , to determine whether the imposition of a certain tax is within legislative competence the nature of the tax will have to be determined through the charging section; what a legislature intends to tax is to be seen from the charging section of the Act. The question here is, whether in imposing entertainment tax on sponsors who make contributions in lieu of advertisements, the state legislature is incidentally acting beyond its field of legislation. 53. Section 6(1) which is the charging section in the Act subjects to levy all payments for admission to any entertainment while Section 6(6) directs that where payment for admission has been made by way of subscription, contribution, donation or otherwise, tax shall be paid on all such payments. For ease of referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s monetary support to the primary organizer. This monetary support is conditional; certain rights through agreements flow from the primary organizer to the sponsor. Through this agreement the sponsor is allowed access to the place of entertainment but not in the sense contemplated by the Act. The sponsor accesses the place of entertainment for setting up its advertisements, banners logos etc. all of which are part of organizing the event. When a sponsor is allowed to set up a stall for the purpose of selling its products, the sponsor has in effect bought space to sell its products and further its business. A sponsor does not make the payments for gratification or for deriving pleasure from the events; these are business transactions to be understood in the commercial sense. Thus, the sponsor is not one getting entertained. The Entertainment Tax Act, under Section 6(6) taxes any payment made through subscription, contribution donation or otherwise. The common denominator in all such payments is that these classes of payments are made for securing seats or any other accommodation in return for entertainment and not for furthering businesses or for advertising. 55. There is authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e equal to the duty payable under Section 3; sub-section (2) of Section 4 provides for different modes specified thereunder for payment of the amount of duty due on the entertainment. Neither the provision of Section 4 (1) nor any of the modes provided under Section 4 (2) can be made applicable for collection of duty on DTH operation. Further, it is noted above that Section 8 provides rule making powers. In exercise of the powers under that provision the Madhya Pradesh Entertainment Duty and Advertisement Tax Rules 1942 were framed. A perusal of the Rules makes it absolutely clear that the collection mechanism under the 1936 Act is based on revenue stamps stuck to the tickets issued by the proprietor for entry to the specified place where entertainment is held. 39. The machinery for collection of duty provided under the 1936 Act has no application to DTH. It is well settled that if the collection machinery provided under the Act is such that it cannot be applied to an event, it follows that the event is beyond the charge created by the taxing statute. See: Commissioner of Income Tax v B.C. Srinivasa Setty, (1981) 2 SCC 460, Commissioner of Income Tax Ernakulam, Kerala v Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant parts of the enactment and the rules are reproduced below: (fb) cable operator means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of a cable television network. xxxxxxxxxxxxxxxx (g) cable service means the transmission by cables of programme including re-transmission by cables of any broadcast television signals; (h) cable television network means any system consisting of a set of closed transmission paths and associated signal generation/control and distribution equipment, designed to provide cable service for reception by multiple subscribers; xxxxxxxxxxxxxxxx (ka) multi-system operator (MSO) means any person including an individual, group of persons, public or body corporate, firm or any other organization or body, who or which is engaged in the business of receiving television signals and value added services from a broadcaster or his authorized agencies and distributing the same or transmitting his own programming service including production and transmission of programmes and packages, directly to the multiple subscribers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hotel or a restaurant; the proprietor may, in lieu of payment under sub-section (1), pay a compounded payment to the Government on such conditions and in such manner as may be prescribed and at such rate as the Government may, from time to time, notify and different rates of compounded payment may be notified for the different categories of hotels. (4) The proprietor of a video cinema shall be liable to pay entertainment tax at a rate to be notified by the Government from time to time in this behalf. (5) The tax payable under this section shall be paid, collected or realised in such manner as may be prescribed. xxxxxxxxxxxxxxxx 45. Power to make rules (1) The Government may make rules for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide, for- (a) collection of tax and payment thereof in the government account by the proprietor; xxxxxxxxxxxxxxxx Rule 26: Payment of tax for cable service (1) The proprietor of a cable television network liable to pay tax in accordance with sub-section (1) of section 7 of the Act shall file monthly returns in Form 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anism, contradict the revenue s position that it is inessential to amend the charging provision and that amendment to the definition would be sufficient in this case. 59. Tata Sky (supra) and M/s Martin Lottery (supra) are also authorities for the proposition that without a charging provision or a viable machinery for collection of the tax, the levy fails. This was first explained in B.C. Srinivasa Setty (supra) where the Supreme Court held as follows: A transaction to which those provisions cannot be applied must be regarded as never intended by s. 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the Income Tax Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legislative scheme defining any of those components of the levy will be fatal to its validity. In view of the above position, this court would have to also consider whether the mechanism and collection provisions exist in respect of the Entertainment Tax Act levy, to make it effective. In view of the clear pronouncements of the courts, without a mechanism or collection provisions, the levy would fail. For this purpose, 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Any person aggrieved by an order forfeiting the security may, within thirty days from the date of service of such order prefer an appeal to the appellate authority in such manner as may be prescribed and the order of the appellate authority shall be final. 64. Section 13 (1) specifies that every proprietor before holding an entertainment on which tax is leviable shall deposit 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. Section 13 (2) postulates that no order of forfeiture of security under Section 13 (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 subsection (2) is only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponsor into a proprietor, nor even an entertainment event, for which admission is free, into a taxing event. Section 6 (6), which is relied here, as the backup provision under the Act, is of no avail, because that provides for the eventuality of admissions being 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. The object of the event, is not to facilitate admissions to it, wholly or partly. The object rather is to ensure that the designers get a platform, to showcase their talents. The admission is not to all; nor available upon payment; it is by invitation. The sponsor may or may not secure any admission rights; if it does, it is wholly irrelevant. Even if it does and is allotted space for a kiosk or other desk, that is not per se an admission to an entertainment event. The entry given through passes, etc to sponsors is purely incidental. 67. There are various forms of sponsorship of different kinds of events. For instance, a movie or a show may be put together purely through sponsorship funding. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich buys tickets to witness the matches for entertainment purposes. For instance, during the IPL tournament, when a sponsor such as Pepsi, as the official sponsor of IPL (for some of the seasons), makes sponsorship payments, it receives the rights to advertise- across platforms including television and radio throughout the country. 69. In such cases, can sponsors be subjected to entertainment tax? Or in another case, when aero shows are held with various private companies showcasing their products to potential buyers, can the sponsors of such events be subjected to entertainment tax? If the same show is ticketed and opened to the public who may have no interest in propagating the industry, then, in such cases an entertainment tax can be levied on the public buying such tickets. However, to tax sponsors, who pay to secure space for business purposes under the Act would be incongruous. Closer home and on a more relatable note, the Bar Council organizes non-ticketed events for its members where there is no entry fee and the events are sponsored. At such events, lawyers may perform shows like stand up comedies, mimicry etc. but that does not necessarily mean that these are entertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to vagaries of certain customers, rather than an entry to an entertainment event: The natural import of the term 'entertainment' is amusement and gratification or some sort. The term connotes something in the nature of an organised entertainment. This is evident from the fact that the Act was enacted to provide for the levy of a duty in respect of admission to theatres, cinemas and other places of public entertainment. Therefore an entertainment to come within the definition of Section 2 (b) and of the provisions of the Act must be some exhibition, performance, amusement, game or sport for the purpose of entertainment, that is, for affording some sort of amusement and gratification to those who see or hear it. In the present case, it is impossible to say on the agreed facts that there is any exhibition, performance, amusement, game or sport which is an integral component factor attracting the visitors to the Calico Dome. In the return, much emphasis was laid on the fact that during the evening hours there was a special programme of fashion show by specially trained girls .....and for that show seating arrangement was also made inside the dome and a stage wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cloth . Many of them might have gone to the place merely for the purpose of watching the display and seeing something which they had not seen before. But the fact that these people went out of curiosity and novelty did not make the exhibition of cloth or the display by mannequins inside the Dome an entertainment, which otherwise was not an entertainment. The word exhibition occurring in the definition of entertainment in Section 2 (b) must take its colour from the natural import of the term 'entertainment'. If certain goods are exposed to view for the purpose of sale, there is no doubt an exhibition of goods in the sense of showing . But that is not any entertainment. The exhibition for sale of the fabrics themselves in elegant surroundings under a canopy put up. by the petitioners did not afford any gratification, diversion or amusement. It was no more than a display of cloth and apparels in a welldecorated shop. The display by mannequins was simply a spectacle of living people instead of dummy models showing of the fabrics for impressing on the visitors the 'chic' of the material manufactured by the petitioner-Mills. To call such an exhibition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the admission to the entertainment events - not for FDCI; nor for the BCCI (which only provided on site advertising) or GMR (the sponsorship amounts received by it being for other rights of advertisement, exclusive of what was given by BCCI). In the case of BCCI and GMR, the arguments of the revenue, stand out in stark relief, because the entertainment event, i.e., cricket match, is controlled by one admission through tickets, which are paid for (and in respect of which tax is demanded and paid); yet the sponsorship amounts received for the same match can potentially be collected by the revenue, under the Entertainment Tax Act. This would result in multiple levies (three fold, to be exact) on one taxing event under one taxation statute- a fortiori an arbitrary result. 73. The Court is also of the opinion that the reliance on Section 6 (6), Rule 11 and Form 6 in the present case does not help the revenue. A juxtaposition of Section 6 (6) with Section 6 (7) underlines the importance of the place where entertainment is provided. Further, Section 6 is subject to other provisions of the Act. Importantly, the reference to events by invitation (under Form 6) is relatable only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied that the Parliament did not intend to introduce a substantive change in the law. As stated hereinbefore, for the aforementioned purpose, the expressions like Rs.for the removal of doubts' are not conclusive. The said expressions appear to have been used under assumption that organizing games of chance would be rendition of service. The court also noticed and quoted the following passage from Virtual Soft Systems Ltd v Commissioner of Income Tax 2007 (9) SCC 665 , and held as follows: It may be noted that the amendment made to Section 271 by the Finance Act, 2002 only stated that the amended provision would come into force with effect from 1.4.2003. The statute nowhere stated that the said amendment was either clarificatory or declaratory. On the contrary, the statue stated that the said amendment would come into effect on 1.4.2003 and therefore, would apply to only to future periods and not to any period prior to 1.4.2003 or to any assessment year prior to assessment year 2004-2005. It is the well settled legal position that an amendment can be considered to be declaratory and clarificatory only if the statue itself expressly and unequivocally states th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion expressed as to the effect of the amendment, it is held that the retrospectivity assigned to it, is of no consequence. However, it is also held that as an amending enactment, which sought to introduce a new levy, which did not exist earlier, the impugned notification would be unreasonable because it would - were it indeed operative - impose onerous obligations upon transactions and those sought to be covered by it, for periods when it was not in force. Those ostensibly covered by it, would have to provision for demands which could not have been levied, because those obligations did not exist. 78. Sections 9 and 10 of the Act require that for any person to enter a place of entertainment a valid ticket with a duly paid tax on it would have to be presented. The exception to this rule is carved out in respect of persons who have some specific duty to perform in connection with the entertainment. The Court has concluded that in the cases of FDCI, those entering the venue, upon invitation or those who enter, to make arrangements do not have to buy tickets. In the case of other ticketed events, such as cricketing or football fixtures, GMR and other organizers charge entertainm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of taxation at higher rate which really amounts to imposition of tax with retrospective effect has to be justified on proper and cogent grounds. In a more recent decision, Commissioner of Income Tax v Vatika Industries 2015 (1) SCC 1 the Supreme Court pointed out the rationale for a general rule of construction against retrospectivity of statutes, in the following manner: The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow s backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lexprospicitnon respicit: law looks forward not backward. As was observed in Phillips vs. Eyre[3], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be imposed only for a particular period and not prior or subsequently it is open to debate whether the statute passes the test of reasonableness at all. In the present case, the High Court sustained the enactment by adverting to Rai Ramkrishna's case when the benefit of the rule had been withdrawn for a specific period. The learned counsel for the State contended that the amendments had been made to overcome certain defects arising on account of the decision of the tribunal in regard to the modalities of working out the relief. But, the impugned amendment brought about by Section 26 is not for that purpose. Assuming that it was the legislative policy not to grant set off in respect of waste or scrap material generated, it becomes difficult to appreciate the stand of the State in the light of the fact that the original Rule continued to be in operation (with certain modifications) subsequent to 1.4.1988. The reason for withdrawal of the benefit retrospectively for a limited period is not forthcoming. It is no doubt true that the State has enormous powers in the matter of legislation and in enacting fiscal laws. Great leverage is allowed in the matter of taxation laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present proceedings on their part are not maintainable. The invocation of the doctrine of estoppel or waiver, in the opinion of this court, under such circumstances is inapt. This is because, the Supreme Court has held, in a series of judgments, that there can be no waiver of fundamental or other statutory rights, nor can such procedural hurdles bar the inquiry into validity of statutes or rules. State of Punjab Anr v Devans Modern Brewaries Ltd 2004 (11) SCC 26 articulated, through a Constitution Bench, this principle, as follows: Even otherwise when the legislative competence of a State is in question, the same goes to the root of the jurisdiction. Once it is found that the State Legislature has exceeded its jurisdiction in imposing the impugned levy, the same being a fraud on the Constitution cannot be sustained on the procedural doctrine of estoppel or waiver. (Also ref Suraj Mall Mehto v AV Viswanath Sastri AIR 1954 SC 545; Bashesharnath v. I.T Commissioner AIR 1959 SC 149; and Olga Tellis v Bombay Municipal Corporation AIR 1986 SC 180 ). For these reasons, it is held that the plea that the petitions cannot be entertained, is insubstantial and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2013, 19.06.2014 and 29.12.2014, wherein the entertainment tax has been imposed on the sponsorship amounts received by the FDCI for conducting the events. 3. In writ petitions bearing W.P.(C) No.6767/2014, W.P.(C) No.2825/2015, W.P.(C) No.9166/2015, W.P.(C) No.6839/2015, W.P.(C) No.5994/2016, W.P.(C) No.1927/2016, W.P.(C) No.9153/2016, W.P.(C) No.4966/2013, W.P.(C) No.10729/2016, W.P.(C) No.10731/2016, W.P.(C) No.7495/2014, W.P.(C) No. 9661/2016 and W.P.(C) No.12287/2015, under challenge are the letters dated 18.09.2014, 09.03.2015, 15.09.2015, 10.07.2015, 01.07.2016, 15.02.2016, 28.09.2016, 14.01.2013, 06.10.2016 and 21.12.2015 respectively issued to the petitioners FDCI, Board for Control of Cricket in India (BCCI), DEN Soccer Private Limited and Pro Sportify Private Limited, asking them to furnish the details of sponsorship amounts received, along with agreements and to deposit entertainment tax at the rate of 15% on total sponsorship amount, including other payments, received. In writ petition bearing W.P.(C) No.7465/2013 and W.P.(C) No.2586/2017, filed by GMR Sports Private Limited (hereinafter referred to as the GMR Sports), the petitioner has challenged the notices da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fashion show. Also, this Court in the said matter had upheld the refusal on the part of respondents to give 100% exemption to FDCI from entertainment tax and upheld the order of the respondents by which the exemption from entertainment tax on the sponsorship amounts was restricted to 50% of the total tax payable. 6. It is further argued that the Hon'ble Supreme Court also in Amit Kumar vs. State of U.P. (2008) 1 SCC 528 has clearly held that fashion shows are entertainment and organizers have to pay entertainment tax on the sponsorship amounts received by them. It is thus apparent that the impugned amendment is only clarificatory/explanatory in nature and does not introduce any new levy. 7. The detailed arguments of learned Senior Counsel of both the parties have already been recorded in detail by my learned brother in his order. It is futile to reproduce the same again; however, I have taken note of those detailed arguments. 8. I have given thoughtful consideration to the contentions and arguments of learned Senior Counsel and have also examined the various provisions of the Act. I proceed to answer the issue posed in these petitions. 9. Essentially, the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose the one which will be in accord with the other parts of the statute and ensure its smooth, harmonious working, and eschew the other which leads to absurdity, confusion, or friction, contradiction and conflict between its various provisions, or undermines, or tends to defeat or destroy the basic scheme and purpose of the enactment....... (emphasis supplied) 11. The Hon'ble Supreme Court in RBI v. Peerless General Finance Investment Co. Ltd (1987) 1 SCC 424 has also held that one of the rules of interpretation is to interpret the same in consonance with the object for which it was enacted. The Court held that the interpretation should match the contextual. The relevant paragraph is reproduced as under:- 33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar sense and be construed according to their grammatical meaning. The relevant paragraph is reproduced as under:- 26. Further we wish to clarify that it is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the object of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the courts are bound to give effect to that meaning, irrespective of the consequences. It is said that the words themselves best declare the intention of the law-giver. The courts have adhered to the principle that efforts should be made to give meaning to each and every word used by the legislature and it is not a sound principle of construction to brush aside words in a statute as being inapposite surpluses, if they can have a proper application in circumstances conceivable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entertainment, or duty imposed upon him by law, or a person authorized by the government in this behalf) shall be admitted to any entertainment except with a ticket in the prescribed form denoting that the proper tax payable under section 6 has been paid. 10. Restriction on entry to entertainment- No person (other than a person who has some specific duty to perform in connection with the entertainment, or duty imposed upon him by law, or a person authorized by the government in this behalf) shall enter or obtain admission to an entertainment without being in possession of a proper ticket as required under section 9. 18. The term ticket is defined under Section 2(u) of the Act. The provision is reproduced as under:- ticket means a ticket or a complimentary pass for the purposes of securing admission to an entertainment in accordance with the provisions of this Act or the rules made thereunder and a duplicate ticket , means a ticket or set of tickets used or intended to be used otherwise than in accordance with this Act or the rules made thereunder; 19. Section 6 of the Act, which is the charging Section, imposes tax on all the payments for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), to which admission is generally on payment, any person is admitted free of charge or 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 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, 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. (7) Where in a hotel or a restaurant, or a club, entertainment is provided by way of cabarets, floor shows, or entertainment is organized on special occasion along with any meal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of admission or reduced rate of ticket shall be deemed to be payment for admission. 23. The definition starts with, using the expression payment for admission includes . The use of word includes in the definition unambiguously demonstrates the intent of the Legislature. The conscious use of the word includes by the Legislature seems to have been done with the intent to give widest possible interpretation to this provision. 24. The Hon'ble Supreme Court in M/s Geeta Enterprises and Ors v. State of U.P Ors, (1983) 4 SCC 202 discussed the meaning of expression includes whenever used by the Legislature and observed as under:- 13. The Allahabad High Court in the case of Gopal Krishna Agarwal v. State of Uttar Pradesh, which was also a case under the Act, held that entertainment tax was leviable on video games. The High Court has very carefully analysed sub-section (3) of Section 2 of the Act and the import of the word 'entertainment' and observes as follows:- The context in which the word 'includes has been used in the definition clauses of the Act does not indicate that the legislature intended to put a restriction or a limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition. (See: Gough v. Gough [(1891) 2 QB 665:60 LJ QB 726]; Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court[(1990) 3 SCC 682, 717 : 1991 SCC (L S) 71]). The word 'includes' when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. The words 'means and includes', on the other hand, indicate an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions .. (emphasis supplied) 29. Again, in Bharat Cooperative Bank (Mumbai) Ltd. vs. Cooperative Bank Employees Union (2007) 4 SCC 685, the Hon'ble Supreme Court, while defining the meaning of expression 'include' used by the Legislature has held in para 23:- 23....On the other hand, when the word includes is used in the definition, the legislature does not intend to restrict the definition; makes the definition enumerative but not exhaustive. That is to say, the term defined will retain its ordinary meaning but its scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act which defines the payment for admission and also in Section 2(aa) of the Act which defines admission to an entertainment. From the object of the Act and the language used by the Legislature in other provisions of the Act clearly shows that the Legislature has consciously used the word 'include' in Section 2(m) and Section 2(aa) of the Act. The use of the word 'include' in these two definitions, defining 'payment for admission' and 'admission to an entertainment' is inclusive in nature. The use of expression clearly shows the intention of the Legislature to give expanded and wide meaning to the definitions of 'payment for admission' and 'admission to an entertainment'. The object and purpose of passing this Act was to impose entertainment tax on the admissions to an entertainment. The use of the expression 'include' is intended to have been used in these two definitions with the object to expand the meaning of the definitions to include all the payments for admission and admissions to an entertainment with intent to curtail the non-payment of entertainment tax by camouflaging the payments or the admissions to an enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to make in any form as a condition of attending , unambiguously depicts the intention of Legislature to give widest amplitude to this provision. To give narrow or restricted interpretation to the definition would certainly defeat the object of the provision and intent of the Legislature. 38. The Hon'ble Supreme Court in Gurudevdatta VKSSS Maryadit (supra) has clearly held that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning.... . The well-settled principle is that the words have to be given its ordinary meaning, especially where the words are clear, plain and unambiguous. The words used are certainly the best source to know and understand the intention of the Legislature while framing the said law. 39. Earlier, there was only one Explanation to Section 2(m) of the Act. By impugned amendment, Explanation 2 was added. The earlier Explanation is now termed as Explanation 1 and is reproduced as under:- Explanation 1: Any subscription raised, contribution received or donation collected in connection with an entertainment, where admission is partly or entirely by tickets/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any place where entertainment is held . Reading of this plain inclusive language suggests that admission to a place of entertainment could be of a person or by any other way like display of goods, brand names or logo or advertisement of one s product etc. at a place where entertainment is being held. Wide amplitude of the provision cannot certainly be restricted. When both the definitions of admission to an entertainment and definition for payment for admission, is read together, it clearly shows that where payment is made for accommodation of the nature of advertisement or display of logo/brand name, it is admission to a place where the entertainment is held and, therefore, is any payment is made and that payment may have been given any name, the tax is leviable on such payment. The Act envisages tax on payments made in any manner, or by any name, if by making that payment, admission to a place of entertainment is sought, then tax is leviable on such payment. 42. The impugned Notification is to be seen in this background for ascertaining if the Legislature vide impugned Explanation 2 has added new levies which were not envisaged in the main provision i.e. Section 2 (m) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation in the light of these principles which the Apex Court has formulated, in order to conclude whether the impugned Explanation is explanatory/clarificatory or it adds new levy, if it is latter, then it has to go. 46. For this, we need to construe Section 2(m). As already discussed, Section 2(m)(i) of the Act states that when a payment is made for seats or other accommodations in any form in a place of entertainment then such payment for seats or other accommodation in any form is subjected to tax as the same is payment for admission. It is apparent that the language used by the Legislature in Section 2(aa) and Section 2(m) of the Act is of widest amplitude. Thus, it can be safely discern from it that the Legislature has always intended to include levy on the payments made for tickets or other accommodations of any nature in a place of entertainment when admission to a place where entertainment is being held, is sought. The conjoint reading of Sections 2(aa) and 2(m)(i) clarify the intention of the Legislature that it had intended to levy taxes on the payments made for other accommodations in a place of entertainment, in any form, which could be, as already discussed, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W.P.(C) No.3199/2011, W.P.(C) No.3200/2011, W.P.(C) No.3201/2011, W.P.(C) No.6564/2011, W.P.(C) No.7505/2011, W.P.(C) No.7506/2011, W.P.(C) No.1169/2010 and W.P.(C) No.4728/2010 against the assessment orders and demand of 50% of the entertainment tax and non-issuance of No Objection Certificate (NOC) on account of non-payment of entertainment tax. This Court directed the issuance of NOC subject to deposit of money. Before Additional Entertainment Tax Officer (AETO), FDCI raised two contentions. The first was that the Fashion shows were not entertainment under the Act and the second was, that the sponsorship amounts received by it were not payment for admission to the entertainment and, therefore, non-chargeable to entertainment tax. The AETO rejected both the contentions of FDCI. 50. The contentions raised by FDCI before AETO is noted by Coordinate Bench of this Court in para 4 of its judgment dated 30.04.2012, reads as under:- 4. A perusal of the assessment orders shows that the principal contentions raised by the petitioners before the AETO were these. The first contention was that the Fashion show was not an entertainment under the Act. This contention was rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainment in para 17 of his order dated 11.06.2009, which is an assessment order for the period 15.10.2008 to 19.10.2009. He has merely referred to Section 2(m) of the Act, and particularly to clause (i) of the provision. He has noted that the definition of the expression payment for admission is an inclusive definition and, therefore, should be construed liberally. He has also referred to Section 2(aa) of the Act which defines the term admission to the entertainment . From this provision he has drawn the inference that even if the payment received by the petitioner is not in consideration of allotment of seats to the sponsor, it would still fall for being considered as payment for admission because of the inclusive definition which is wide enough to cover participation in any Fashion show. In support of his conclusion the AETO merely referred to Section 6(6) of the Act in paras 24 and 25 of the impugned order. 53. The finding that fashion shows are entertainment has attained finality since matter though taken to the Hon'ble Supreme Court was withdrawn. Even otherwise in Amit Kumar (supra), the Hon'ble Supreme Court has clearly stated that fashion shows are subjected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tests to fall within the ambit of the aforesaid section: 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 tombola in a club hall amounts to entertainment although the playing of tombola 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 deemed to be an entertainment. 4. that the duration of the show or the identity of the person who operates the machine and derives pleasure or entertainment or that the operator who pays himself, feels entertained is wholly irrelevant, in judging the actual meaning of the word 'entertainment' as used in Section 2 (3) of the Act. So also the fact that the income derived from the show is shared by one or more persons who run the show. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of payment for admission in Section 2(m) of the Act is wide enough to include all payments by piercing the camouflage as also observed by the Apex Court in para 12 of M/s Geeta Enterprises (supra) where it has clearly held that even where the admission to an entertainment is free, but if organizers derives some benefit in terms of money, it would be deemed to be an entertainment . 60. This Court in earlier challenge by FDCI in its judgment dated 30.04.2012 in para 16, has clearly held 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... This makes clear that this Court in its earlier judgment has clearly opined that whether a sponsorship amount paid amounts to payment for admission or not is a question of facts, to be ascertained from documents. In this context, this Court has further observed that The provisions of the Act have to be applied only to the facts gathered and governing the case and not in vacuo. 61. This Court has clearly held that true nature of the payment is essentially to be as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no flaw, irregularity or irrationality in the decision of the competent authority justifying interference under Article 226 of the Constitution of India. The relevant part of the impugned order which has been extracted by us hereinabove bear out the reasons for not accepting the claim of the petitioner in full. The petitioner has been treated fairly and objectively and we, therefore, decline to interfere. 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 already deposited, and subject to the petitioner being given reasonable opportunity of being heard. 62. The said order was challenged by FDCI before the Hon'ble Supreme Court in SLP (C) No.23411/2012 . The said SLP was withdrawn by the FDCI with permission to approach the appropriate forum if any adverse order is passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) Where the payment for admission to an entertainment, 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. 66. This clause levy tax on two types of payments. Firstly, on payments made in lump sum and secondly, on the amount of payments made otherwise for admission . The expression made otherwise thus includes payments made in other forms for admission to a place of entertainment. Section 2(m) of the Act states that any payment made in any form is payment for admission. On superimposing the charging Section 6(6) of the Act on Section 2(m) of the Act, it is clear that charge shall be levied on payments made otherwise and as discussed earlier it could be in the form of benefits, services etc. This shows that even before the impugned amendment was added to Section 2(m) of the Act, such services or benefits were subjected to entertainment tax. This goes to show that the Explanation has simply clarified the provisions of Section 2(m). It is clarificatory in nature and is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Usually, if not invariably, such an Act contains a preamble, and also the word declared as well as the word enacted . But the use of the words it is declared is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. 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 retrospective. 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. The language shall be deemed always to have meant or shall be deemed never to have included is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the amended provision was clear and unambiguous. An amending Act may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not substantive. The view expressed to the contrary in Virtual case [(2007) 9 SCC 665] is not correct. 69. Also, in the case of ETO v. Ambae Picture Palace (1994) 1 SCC 209, the Hon'ble Supreme Court has clearly held that when the Parliament or State Legislature has the competence to legislate, they can do so prospectively as well as retrospectively and the taxation laws are no exception to this power. The retrospective effect of Explanation 2 does not make it illegal for two reasons; firstly that the Legislature has in express terms made it operational with retrospective effect and secondly, the very nature of amendment is clarificatory and thus does not in any way affects the existing rights of the parties. 70. Another argument of the petitioners is that no machinery and methodology is provided under the Act to calculate the tax on the payments as described in Explanation 2 of the Act. It is argued that the amendment is vague and unguided and there is no mechanism for determining the value of the goods supplied or services rendered or benefits provided. 71. On the other hand, it is argued on behalf of the Revenue that Section 8 of the Act restricts holding of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntertainment . The language used is there shall be levied . On imposing the definition of payment for admission in Section 2(m) of the Act, it is evident that all payments made in any form or be termed by any name either for seats or other accommodation in any form in a place of entertainment, the charge shall be levied on such payments which may be in terms of money or which could be in terms of benefits/services etc. as already discussed and it is the duty of organizer to collect and deposit it. 74. Section 8 of the Act prohibits the holding of any event except with the prior information to the Commissioner in the prescribed manner. Rule 11 of the Rules provides the manner in which such information is to be furnished. The same is reproduced 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 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis 21. Specimen signature of the persons who own 22. Specimen signature of the person responsible for management 23. Additional information, if any, required by the Commissioner Date . Signature .. 76. The said Rule thus also distinguishes in the events which are ticketed and those which are non-ticketed, i.e., where the admission is by invitation. Here, it is important to note that pursuant to Sections 8 and 9, there is absolute restriction to entry to a place of entertainment (excluding those exempted under Sections 8 and 9) otherwise than on a ticket, and ticket also includes complimentary passes [Section 2 (u)]. From the language of Form 6, it is clear that the organizer is required to disclose the expenditure incurred and the sources of such expenses. While disclosing such expenses and its sources, the organizer has to disclose of the contracts he has entered into with various entities or persons whom he had allowed admission to a place of entertainment either for seats or/and by accommodating them to the extent of allowing them to display their logo, brand name or put up their advertisements. Where the agreement is to provide free serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istribution of invitation cards if distribution is on first come first serve basis and any other additional information, if any, required by the Commissioner. The list is exhaustive, wherein the organizer of an event can very clearly disclose sponsorship amounts received by him. He can also disclose the value of goods, which are not difficult to be valued. Also, it is noteworthy that even before the impugned Explanation 2, the Form 6 required the organizer of a non-ticketed event to disclose as per serial No.10 and 11 of Form 6, the name of sponsors and advertiser and the amount received from them. This further shows that impugned amendment does not levy new taxes. 80. As regards the value of benefits or services he has received from persons whom he has allowed admission, is concerned, he knows the expenditure he had to incur if those services or benefits are not provided to him and he had to incur those expenses on his own. These facts are within his knowledge, being organizer or manager of the entertainment event. Form 6 contains columns which require an organizer of the event to estimate the expenses and disclose its source. It therefore cannot be said that the Act has no cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admission which definition is inclusive. The object and purpose of the Legislature for making the definition of Section 2(m) of the Act so broad and inclusive is to defeat indigenous methods adopted to avoid tax. The Hon'ble Supreme Court had also acknowledged this attitude of organizers that in order to avoid taxes, they tactfully invent new methods. In Amit Kumar (supra) case, the Hon'ble Supreme Court has come heavily on FDCI and while rejecting their contentions that entry by invitation cards was not payment for admission , the Hon'ble Supreme Court has held that though tickets may not have been issued in respect of the programme and only invitation cards had been issued, the same was merely a subterfuge for the purpose of evading and/or avoiding payment of entertainment tax. 85. I thus conclude that sponsorship amounts are payments for entry to a place of entertainment if it fulfills other requirements of Section 2(m) of the Act. Similarly, putting up advertisements, display of product/brand name etc. in place of entertainment is admission to an entertainment in terms of Section 2(aa) of the Act. The impugned amendment, whereby Explanation 2 is added retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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