Govt. of NCT of Delhi & Ors. Vs Indian Trade Promotion Org. & Ors (Delhi High Court)
Delhi High Court held that the respondent organizing trade fairs at Pragati Maidan, New Delhi is liable to pay entertainment tax. Accordingly, order passed by Financial Commissioner setting aside levy of entertainment tax held unsustainable.
Facts- It is the case of the petitioners that respondent 1 is an authority organizing Trade Fairs in the area commonly known as Pragati Maidan, New Delhi. It is stated that respondent No.1 charges admission fee in the form of ticket to allow people to visit fairs and also levy separate fee for other events such as Fashion Shows, Theatre Shows and Movies conducted within the same complex by individual organizations. The grievance of the petitioners is that respondent No.1 was initially exempted from payment of entertainment tax for several years but a policy decision was taken on 18 November 1996 by the Competent Authority and exemption from payment of entertainment tax was withdrawn.
The petitioners invoke the extra ordinary jurisdiction of this Court under Article 226 read with Article 227 of the Constitution of India challenging the impugned order dated 30 November 2007 passed by the Financial Commissioner, Delhi/respondent No.2 in appeal, whereby the FC allowed the appeal filed by the respondent under Section 15(4) of the Delhi Entertainment and Betting Tax Act, 1996, setting aside the imposition/levy of entertainment tax by the petitioners.
Conclusion- Although, we are aware that there are regulated hours for the purposes of trade and commerce, where the main purpose apparently is promotion of trade and business, however there is no challenge to the fact that entry of general public is not restricted, and people of all ages and genders visit the site for a variety of gratification, entertainment or amusement on payment of additional or higher charges/fee. It is pertinent to mention here that the assessee may also be imposed with a levy of entertainment tax wherever people are allowed free of charge inside the complex by virtue of Section 14 of the Act.
Held that the impugned order dated 30 November 2007 passed by the FC cannot be sustained in law. Accordingly, the respondent is liable to pay entertainment tax for the assessment years in question.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioners invoke the extra ordinary jurisdiction of this Court under Article 226 read with Article 227 of the Constitution of India challenging the impugned order dated 30 November 2007 passed by the Financial Commissioner, Delhi/respondent No.21 in appeal case bearing No. 33/0 1 -CA, whereby the FC allowed the appeal filed by the respondent under Section 15(4) of the Delhi Entertainment and Betting Tax Act, 19962, setting aside the imposition/levy of entertainment tax by the petitioners.
FACTUAL BACKGROUND:
2. Briefly stated, it is the case of the petitioners that respondent 1 is an authority organizing Trade Fairs in the area commonly known as Pragati Maidan, New Delhi. It is stated that respondent No.1 charges admission fee in the form of ticket to allow people to visit fairs and also levy separate fee for other events such as Fashion Shows, Theatre Shows and Movies conducted within the same complex by individual organizations. The grievance of the petitioners is that respondent No.1 was initially exempted from payment of entertainment tax for several years but a policy decision was taken on 18 November 1996 by the Competent Authority and exemption from payment of entertainment tax was withdrawn. It is stated that on imposition of tax for the year 1996-97, the respondent No.1 filed Civil Writ Petition No. 129/99 titled „ITPO v. Govt. of NCT of Delhi‟. However, since no stay was granted, it deposited a demand draft of Rs. 6,40,233.75/- as part payment.
3. It is stated that for the assessment year 1997-98, 1998-99 and 1999-2000 assessment proceedings were initiated against the respondent for non payment of tax and a tax of Rs 15,03,776/- was payable on various other entertainment activities during the year 1996-97 with interest of Rs 11,98,762/-; that the total demand for the year 1996-97 assessed to Rs 27,02,538/- and for the assessment year 1997-98, tax payable came to Rs 21,19,294/- out of which Rs 13,32,790/- was Entertainment Tax and Rs 7,86,504/- was the interest. Likewise, for the assessment year 1998-99, a sum of Rs 56,50,782/- was payable, which included entertainment tax of Rs 43,16,878/- and interest of Rs 13,33,404/-.
4. Accordingly, a Show Cause Notice dated 23 February 2000 was issued, to which reply was filed by respondent No.1, and a personal hearing was afforded to its Authorized Representative. Ultimately, three assessment orders were passed for the aforesaid years on 10 March 2000, 13 March 2000 and 16 March 2000 respectively. The appeal was filed by the respondent No. 1, which was dismissed by the Appellate Authority vide order dated 29 December 2000. Respondent No.1 filed a second appeal under Section 15(4) of the Act, in which the main challenge was with regard to the inapplicability of Section 2(i) of the Act that defines the word “entertainment”. In order to appreciate the questions of law involved in the instant matter, it would be expedient to reproduce the relevant portion of the impugned order dated 30 November 2007 passed by the FC, which reads as follows:-
“The impugned order has been challenged on grounds that it has been passed by the Deputy Commissioner who had no authority to exercise powers u/s 15(3) of the Act. The respondent has submitted that the Deputy Commissioner was properly authorised u/r 2, Sub Rule (iii) of the Rules. There is no dispute that the Deputy Commissioner appointed was covered u/s 3 Sub section 2 of the Act. Under this section, officers are appointed by the Government to assist the Commissioner in the execution of his functions under the Act and they are required to exercise such powers as may be conferred and perform such duties as may be required by or under the Act. The respondent claims that the appeal has been heard by the Deputy Commissioner duly appointed u/s 3(2) of the Act and who, under the provisions of Rule 2(iii), was exercising powers and performing functions of the Commissioner u/s 15 of the Act. I do not agree with the counsel for the appellant that powers u/s 15(3) can only be exercised by the Commissioner because there is a specific provision which allows for appointment of Deputy Commissioner for exercising powers and performing functions of the Commissioner under different sections; including u/s 15(3) of the Act and this finds particular mention under Rule 2(iii) of the Act. The appellant has not relied on any document to show that the powers of the Deputy Commissioner, appointed u/s 3(2) of the Act, had been circumscribed to specifically exclude performing functions of the Commissioner u/s 15(3) of the Act. I therefore conclude that the impugned order does not suffer from the infirmity of having been decided by an authority with no jurisdiction. The amount of tax which has been levied by the Entertainment Tax Officer has not been disputed in the present appeal and will merit no consideration. The important issue under challenge is that the impugned order has assessed the liability of payment of tax of the appellant, without considering the merits and the objectives for which the appellant organization had been set up. On this count, appellant has challenged the imposition of tax on the entry tickets. The case of the appellant is that the organisation had been set up by the Govt. of India as a trade promotion organisation with a mission to develop and promote exports through the medium of holding trade fairs. It is their submission that they assist Indian companies in product development and export development through buyer-seller meets and hence their mission and objective is not to make profit but only organize promotional activities. They have submitted that in the appeal, filed before the Commissioner (ET), they had pleaded that no entertainment tax be levied on the entry fee charged from the visitors coming to the trade fairs. The counsel for the appellant has sought to make a distinction between visitors to the fair and those among them who pay another fee for entry to events of entertainment, being organized within the fair. The counsel has maintained that the activities and the business of the appellant has no relation to entertainment, because the trade fair as a whole cannot be termed as a place of entertainment. In the rulings relied upon by the appellant, he sought to establish that admission fee to a place of entertainment is distinct from the entry fee being charged in order to regulate the visitors inside the trade fair grounds. The counsel has relied on a number of rulings to establish a definition of “entertainment”, in the context of the objectives being served by the appellant organisation and the scope of service provided by it. He has relied upon the interpretation of the term given in the Encyclopaedia Britannica, as well as that given in the booklet of the International Trade Centre, to establish that trade fairs and exhibitions are merely glorified market places and the individual exhibitors could be organizing side shows within the trade fairs, with separate admission fee. He has maintained that a trade fair concentrates the purchasers of a product, attracts buyers from all over the world and allows the companies to make product presentation, assess audience interest and buyer reaction and also to assess the competition from other exporters. The counsel has dwelt at length to establish a distinction between entry ticket vis-à-vis the admission charge for fashion shows, film shows etc. which are organised separately. The counsel for the respondent has accepted that the appellant is an authority which conducts trade fairs and that apart from the admission fee paid by people who enter the fair, a separate fee is being charged for fashion shows, trade shows and movies, being conducted by individual organizations within the same complex. The counsel has relied upon the provisions of section 2(i) to emphasize that any exhibition organized in trade fair, where entry fee is paid, is liable to pay entertainment tax and hence entertainment tax is payable for entry and also whenever special shows with tickets are performed. It has relied upon the test laid down by the Hon’ble Apex Court for a show to fall under the ambit of section 2(3) in the judgement reported in (1983) 4 SCC 202, to show that the admission may be free but if an exhibitor derives monetary benefit with it is deemed to be an entertainment and that it is immaterial whether the payment is made at the time of entry to the fair grounds or later. The counsel has also relied on other judgements also, which however are in the context of holding of video shows/games during bus journeys, holding music shows and of entertainment provided by cable TV operators etc. to press the significance of the activities to determine entertainment. The counsel has submitted that complete tax had not been paid by the appellants, particularly for the assessment year 1996-97, when tax was paid only on the film show tickets and the fashion show tickets. The interesting question is whether the fee paid for entry into the fair would attract entertainment tax; whether entry gained into the fair grounds would squarely fall within the meaning of “entertainment” u/s 2(i) of the Act. The rulings relied upon by the counsel for the respondent are in the context of video games being located in video parlours, entertainment tax on admission of cars entering drive-in theatres and in the context of entry to music shows. One of the rulings relied upon by the counsel for the respondent is of the Hon’ble Bombay High Court where the Hon’ble court had held that payment of admission to a discotheque will be subject to entertainment tax, since both the groups – those who are dancing and those who are looking have submitted themselves to a place of entertainment. This ruling also does not find a parallel in the present situation. Another ruling relied upon by the counsel for the respondent relates to the orders of the Hon’ble Delhi High Court passed in WPC 43/1987 and WP(C) 44/1987 decided on 24.9.04. This ruling is in the context of two hotels where discotheque were being run and the issue is regarding payment made by a person who, having been admitted to one part of entertainment was subsequently admitted to another part thereof. However, in the context of the present case, the appellant has submitted that the entry to the trade fair grounds did not automatically allow admission to all the visitors, to the entertainment shows being organized and for which there was a separate admission fee. I agree with the argument that the entry tickets were solely for the objective of restricting the entry of visitors within the trade fair grounds and that this fee did not automatically permit the visitors to gain entry into individual entertainment centres, providing entertainment through separate admission fee. The impugned order also shows that there was sale of tickets for the fashion shows and film shows, as distinct from the entry fees. I therefore conclude that the impugned order suffers from the infirmity that it has not analysed in detail how entry tickets to the fair grounds attracted entertainment tax as distinct from that leviable on tickets for film shows, fashion shows etc. The impugned order has concluded that in the present case any person gaining entry to the trade fair, was being provided entertainment or amusement on the basis of that entry fee, since the entry fee did not restrict the entry to bonafide purchasers nor adjusted in the fee against any purchases. The impugned order has mentioned that the appellant has been organizing exhibitions, shows, films, fashion shows etc. I conclude that admission to these events would attract the provisions of the Act, as distinct from the entry fee to the trade fair grounds, particularly when such events were allowing admission through a separate paid ticket.
