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TMI Blog2012 (4) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... ner is a society registered under the Societies Registration Act, 1860, established solely for the purpose of promoting and fostering the growth and development of the Indian Fashion industry. It organizes the India Fashion week, business-to-business interaction events and other Fashion shows. It is claimed that these are not ticketed events and that entry to the Fashion shows/ Fashion weeks is exclusively by invitation, both for domestic and international buyers, associated professionals and media. It was granted 100% exemption from the liability to pay entertainment tax under the Act in respect of the events held from the year 2002 to the year 2004; the exemption was reduced to 50% in respect of the events held in the years 2008 and 2009. Thereafter the Government of NCT, Delhi refused the grant of exemption from entertainment tax for all subsequent Fashion events conducted or organized by the petitioner. 3. The petitioner applied for exemption from payment of entertainment tax under Section 14 of the Act regarding Fashion weeks organized by it for the periods from 18.03.2009 to 23.03.2009 and from 15.10.2008 to 19.10.2008 in Delhi. Under Section 14 of the Act the exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for admission to the entertainment and therefore not chargeable to entertainment tax. This contention was also rejected by the AETO, relying upon the inclusive definition of the term payment for admission in Section 2 (m) of the Act. According to him under Section 2 (m) (i), any payment made by a person for seats or other accommodation in any form in a place of entertainment was chargeable to entertainment tax. He also referred to definition of the term admission to entertainment in Section 2 (a) of the Act. According to him Section 2 (m) (i) read with Section 2 (a) of the Act covered the case of the petitioner and therefore it was liable to pay entertainment tax in respect of the Fashion show. The AETO also referred to and relied upon sub-sections (1) and (6) of Section 6 of the Act. Sub-section (1) of Section 6 is the charging Section, which charges tax on an entertainment. Subsection (6) says that where the payment for admission to an entertainment is made wholly or partly by means of a lump sum paid as subscription, contribution, donation or otherwise, the entertainment tax shall be paid on the amount of the lump sum and on the amount of payment made for admis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment orders passed by the AETO on 11.06.2009 and the order passed by the Government of NCT of Delhi on 10.09.2009. 7. Two contentions have been put forward before us on behalf of the petitioner. The first contention is based on the powers of delegation given under Section 4 of the Act to the government. According to Section 2 (j), Government means the Government of the National Capital Territory of Delhi. Section 4 is couched in the following words: - 4. Delegation (1) The government may, by notification, delegate all or any of its powers under this Act, except those under sections 3, 6, 7 and 45 to any person or authority subordinate to it. (2) The exercise of any powers delegated under sub-section (1) shall be subject to such restrictions, limitations or conditions as may be laid down by the government from time to time and shall also be subject to control and revision by government at any time. 8. Section 6 is the charging section and it provides for levy of entertainment tax in respect of all payments for admission to any entertainment, other than an entertainment to which Section 7 applies, at such rate not exceeding 100% of the payment as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not voluntarily pay. (underlining ours) 11. These observations of the Federal Court were adopted by the Supreme Court in Neptune Assurance Company Ltd. v. LIC of India, (1963) 48 ITR 144. In this decision it was observed that the assessment only particularised the amount of tax payable as per the rates fixed by the Finance Act and that it did not create a right to refund for the first time since that right had already come into existence as soon as according to the relative Finance Act it became ascertainable that the tax paid in advance had exceeded the tax payable. 12. In K.S.Venkataraman Co. v. State of Madras, (1966) 60 ITR 112 the Supreme Court pithily observed as under: - Let us now scrutinize the said machinery to ascertain its scope and ambit. Section 3 of the Income-tax Act is the charging section; it imposes a tax upon a person in respect of his income. As a learned author pithily puts it, section 3 charges total income; section 4 defines its range; section 6 qualifies it; and sections 7 to 12B quantify it. 13. In Ahmed Ibrahim Sahigra Dhoraji v. CWT, (1981) 129 ITR 314, the Supreme Court summed up the position in the following manner: - Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders have to be passed by the officers executing the Income Tax Act. They merely give effect to the charge of the tax. If these principles are borne in mind it will be clear that Section 4(1) of the Act with which we are concerned cannot, in the very nature of things, enable the government to delegate its powers under Section 6. Despite the section, it is impossible to conceive of a delegation of the charge of tax because, as already pointed out, the charge is created by the statutory provision itself and it does not require any separate agency or order to create it. It is only to quantify the charge of tax that an order may have to be passed. It may be that Section 4(1) of the Act, when it also refers to Section 6, amongst other sections, was quite redundant but that is no reason to say that the AETO who merely quantified the charge of tax by passing an assessment order was a delegate of the charge of entertainment tax. What the AETO has done by passing the assessment orders is only to quantify the entertainment tax payable by the petitioner. It is not disputed that the power to pass the assessment order and quantify the entertainment tax can be delegated and there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out ascertaining the basic facts or examining the terms and conditions of the sponsorship agreement. The entire exercise seems to us to be meaningless, if the factual background and the agreement between the parties have not been examined. The provisions of the Act have to be applied only to the facts gathered and governing the case and not in vacuo. We are therefore of the opinion that the impugned orders passed by the AETO have to be quashed. We accordingly issue a writ of certiorari quashing them. It is open to the AETO to examine the relevant facts including the terms and conditions of the sponsorship agreements and thereafter consider the applicability of the provisions of the Act and decide whether the petitioner is liable to pay entertainment tax or not, by passing fresh orders of assessment after hearing the petitioner. 17. So far as the contention of the petitioner against the order dated 10.09.2009 passed by the Government of NCT of Delhi, granting 50% exemption to the petitioner from entertainment tax is concerned, we do not find any strong grounds to quash the same. The power vested in the Government of NCT of Delhi under Section 14 of the Act to grant exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from payment of tax under this Act on such terms and conditions as it may deem fit to impose. (5) Where any exemption from payment of tax is granted under sub-section (4), the proprietor of such entertainment shall furnish to the Commissioner such documents and records and in such manner as may be prescribed. (6) If the proprietor of an entertainment exempted under sub-section (4) fails to furnish the documents and records required under sub-section (5), or fails to comply with any conditions imposed or directions issued in this behalf, or if the government is not satisfied with the correctness of such documents or records, the government may cancel he (sic.) 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. 18. Before passing the impugned order granting 50% exemption from payment of entertainment tax as against the claim of 100% exemption made by the petitioner, a personal hearing was given on 18.08.2009. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually. From the audit report and balance sheet submitted by FDCI, it is noted that the net current assets as on 31.3.2009 was ₹ 8.89 crores which includes cash and bank balances of ₹ 7.48 crores. Since the financial health of the organization is satisfactory, there is no convincing reason as to why exemption from payment of entertainment tax on fashion shows organized by it should be continued at the cost of Government revenue. However, considering the current scenario of recession in industrial and export sector and to protect Delhi as world class city in view of the forthcoming Commonwealth Games, the Government accepts the plea of the FDCI to grant exemption from payment of entertainment tax only to an extent of 50% of the tax amount as a special case. This exemption from payment of tax upto 50% of the tax amount is allowed on the two events i.e. 15.10.2008 to 19.10.2008 and 18.03.2009 to 23.03.2009 which have already been held and the forthcoming Van-Heusen India Men‟s Fashion Week to be held from 11th 13th September, 2009. It is clarified that this exemption is not extended to future events being planned by FDCI. The Commissioner, Excise, Enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecline to interfere. 21. In respect of the other writ petitions relevant to the other Fashion events the position is like this. In respect of the W.P. (C) 1169/2010, it is against the assessment order passed by the AETO on 10.09.2009 bringing to tax the sponsorship amount collected by the petitioner in respect of the Van Heusen India Men‟s Week, a Fashion show to be held from 11th to 13th September, 2009. For the reasons stated by us in W.P. (C) 1145/2010 the assessment order is quashed with the same directions. For this Fashion show also the Government of NCT of Delhi has granted only 50% exemption from entertainment tax vide order dated 10.09.2009. For the reasons stated by us W.P. (C) 1145/2010 we refrain from interfering with this order. 22. In respect of the other writ petitions, no assessment orders have been passed by the AETO levying entertainment tax on sponsorship amounts collected by the petitioner. However, those writ petitions challenge the orders passed by the Government of NCT of Delhi rejecting the application for exemption from entertainment tax. In line with our decision in W.P.(C) 1145/2010 on this point we uphold these orders and dismiss the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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