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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2338 OF 1996
Mumbai Grahak Panchayat .... Petitioner vs 1 The State of Maharashtra 2 Mr. Pramod Navalkar 3 The Collector, Mumbai Suburban District 4 Wizcraft 5 Shiv Udyog Sena .... Respondents
Mr. Uday Warunjikar i/by Mr. S.V. Deshpande for the petitioner.
Mr. Ravi Kadam, Advocate General with Ms.Madhubala Kajale, AGP for respondents 1 to 3.
Mr. F. Devitre, Sr. Advocate with Mr. Rohan Cama i/by M/s.Sanjay Udeshi & Co. for respondent no.4.
CORAM: D.K. DESHMUKH & ANOOP V. MOHTA, JJ.
DATE : April 13, 2011
P.C.:
By this Petition, which is filed in public interest, the Petitioner challenges the Order dated 19 October 1996 passed by the
Government of Maharashtra granting exemption from levying of
::: Downloaded on - 09/01/2021 12:48:58 ::: 2 wp-2338-96.sxw entertainment duty and surcharge to the programme that was to be held by Respondent no.4Wizcraft. The facts which are relevant and material for deciding this Petition are that the PetitionerMumbai
Grahak Panchayat is a voluntary consumer organisation registered under the Societies Act,. It is stated that it is engaged in promoting and protecting the consumer interests in India. According to the
Petitioner, the exemption has been granted in favour of Respondent no.4 in an arbitrary manner and in violation of the statutory provisions. It results in causing huge financial loss to the Government and, therefore, the present Petition has been filed challenging the order granting exemption in public interest.
2 It appears from the record that on 27 September 1996 a letter was addressed to Shri Pramod Navalkar, who has been described in the letter as Minister of Cultural Affairs of the Government of
Maharashtra, stating therein that Respondent no.4 is an
Entertainment Agency and is India’s premier Event Management and
Marketing Company. It was stated “We have been appointed and confirmed as the Promoters for the King of Pop Michael Jackson
History Tour 199697 in India.”. It was further stated that two promotional shows of the world famous star and The King of Pop
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Michael Jackson are being organised on 30 October and 1st November
1996. It was further stated “Michael Jackson has agreed to perform these shows in aid and benefit of the charity organisation – Shiv
Udyog Sena, a registered institution for a charitable purpose. It was stated that the registration certificate of Shiv Udyog Sena and Income
Tax exemption granted under Section 80G are attached to the application. It was further stated that “the net income generated from the show would be used by our Charity for providing employment opportunity for the youth”. It was stated that No Objection
Certificate from the Ministry of Finance, Department of Economic
Affairs, Government of India for organising and staging of concerts of the above mentioned artist has already been obtained. A copy of the certificate to which a reference is made issued by the Department of
Economic Affairs is annexed to the Petition which is dated 26 July
1996. A perusal of that letter shows that it was represented to the
Government that Respondent no.4 will retain only 15% of the net income and remainder 85% will be donated to the reputed/recognised charities. On 19 October 1996 on the basis of the application dated
27 September 1996 an order was made. That order makes a reference to two Government Resolutions, (i) dated 23 October, 1972 and (ii)
30 July 1977 and it further states that “As stated by you in your letter
::: Downloaded on - 09/01/2021 12:48:58 ::: 4 wp-2338-96.sxw and in view of the above as the performance of the programme is of a classical nature and which is being organised to raise funds for charitable cause on 1st November, 1996 at Shahaji Raje Bhosale Krida
Sankul (Andheri Sports Complex), I am to state that this programme in aid of charity towards “Shiv Udyog Sena” is exempted from levy of
Entertainment Tax Duty and Surcharge.” The submission of the
Petitioner is that the order of exemption has been granted on the basis of the application dated 27 September 1996 which contains several incorrect and misleading statements. It is submitted that the letter dated 27 September 1996 states that Shiv Udyog Sena has been registered for a charitable purpose. However, on the date of that application, it was admittedly not so registered. It was actually registered on 24 October 1996 though it was already registered under the Societies Registration Act. It was further submitted that no inquiry was made by the Government into the charitable purpose that is to be served by Shiv Udyog Sena before granting the application. It is the contention of the Petitioner that the power of the Government to grant exemption under Section 6 of the Bombay Entertainment
Duty Act has been used by the Government which at that time was controlled by political party Shiv Sena for the benefit of its own organisation i.e. Shiv Udyog Sena.
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3 The case of the State Government, on the other hand, is that the
Government Resolution dated 22 November 1973 grants exemption from payment of entertainment duty to all performances of music
(classical, light and instrumental) and classical and folk dancing from
Western and Eastern countries. It is further submitted that by
Government Resolution dated 30 July 1977, exemption from payment of surcharge has also been granted to such programmes. It was also submitted that by Government Resolution dated 4 January 1974, it has been clarified that the exemption from payment of entertainment duty also extends to performances of music (classical light and instrumental) and classical and folk dancing from Western and
Eastern Countries would be taxed if these include even one single small item of Ball Dancing and/or Cabarat Dancing. It was clarified that classical music also includes beat music. It was contended that therefore that the programme was entitled for exemption from payment of entertainment duty and surcharge under the general orders of the Government itself and, therefore, it was not necessary to consider the application for grant of exemption because a part of the proceeds were to go to Shiv Udyog Sena.
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4 We have heard the learned counsel appearing for Respondent no.4 also. According to Respondent no.4, under the Government
Resolution, there is a general exemption granted to all musical programmes. It was further submitted that by two agreements dated
15 October 1996 and 16 October 1996 entered into by Respondent no.
4 with Respondent no.5, 85% of the profit of the programmes are to be donated to Shiv Udyog Sena. It was pointed out that even if the aspect that Shiv Udyog Sena is a charitable organisation and because substantial portion of the profits of the performance of the programmes would go to that organisation is ignored, then also because of the Government Resolution granting general exemption,
Respondent no.4 is entitled to grant of exemption from payment of entertainment duty as a matter of right. It appears that there was a
Writ Petition filed before the Nagpur Bench of this Court challenging the exemption granted from payment of entertainment duty to the same programme. Pursuant to the order of this Court and the
Supreme Court in that Petition, an amount of Rs.3,33,76,000/ has been deposited in this Court and that amount has been directed to be invested in fixed deposit. That amount has been directed to be deposited in this Court obviously to secure the amount of entertainment duty which the State Government will be entitled to
::: Downloaded on - 09/01/2021 12:48:58 ::: 7 wp-2338-96.sxw receive in case it is held that Respondent n.4 is not entitled for grant of exemption from payment of entertainment duty.
5 Now the order impugned in this Petition admittedly has been made by the State Government under the provisions of the Bombay
Entertainment Duty Act, 1923. Section 6 thereof which is relevant for our purpose reads as under :
“6 Entertainments for charitable or educational purposes exempted; exemption by State Government :
(1) Entertainments duty shall not be levied on payments for the admission to any entertainment where, in the case of any area for which a Commissioner of Police has been appointed, the Commissioner of Police, or elsewhere, the District Magistrate, is satisfied that
(a) the whole of the takings thereof are devoted to philanthropic or charitable purposes without any charge on the takings for any expenses of the entertainment; or
(b) the entertainment is of a wholly educational character; or
(c) the entertainment is provided partly for educational or partly for scientific purposes by a society, institution or committee not conducted or established for profit
(2) Where the Commissioner of Police or the District Magistrate, as the case may be, is satisfied that the whole of the net proceeds of an entertainment are devoted to philanthropic or charitable purposes, and that the whole of the expenses of the entertainment do not exceed twenty per cent of the receipts, the amount of the entertainment
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duty paid in respect of the entertainment shall be refunded to the proprietor.
(3) The State Government may, by general or special order, exempt any entertainment or class of entertainments from liability to entertainments duty subject to such terms and conditions, if any, as may be specified in the order.
[ Explanation: In this section, the takings or net proceeds of an entertainment shall be deemed to be devoted to philanthropic or charitable purposes if such takings or net proceeds are devoted to the benefit of Scheduled castes or Scheduled Tribes or for the advancement of any class of citizens declared by the State Government as socially and educationally backward classes but not to the benefit of any other class, sect or community or to any religious purposes.]
6 Perusal of the above quoted Section 6 shows that subsection (1) vests power in Commissioner of Police, where there is a
Commissioner of Police appointed, at other places and District
Magistrates at other places to grant exemption from payment of entertainment duty to any programme of entertainment which is being held for philanthropic or charitable purposes or partly for educational or partly for scientific purposes. We are in the present case not really concerned with the provisions of subsections (1) and
(2), because in the present case, exemption has been granted by the
State Government. The power of the State Government to grant
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Government to grant exemption from payment of entertainment duty either by a special order or by general order. It appears that in exercise of its power under subsection (3) of Section 6, the State
Government has issued general order dated 22 November 1973 granting exemption from payment of entertainment duty to all performances of Indian classical music etc. The exemption granted by
Resolution dated 22 November 1973 has been clarified by the
Government Resolution dated 4 January 1974. There is also
Government Resolution issued granting exemption from payment of surcharge dated 30 July, 1977. Therefore, when an application is made to the Government by any organisation claiming that it is entitled to exemption from payment of entertainment duty pursuant to the general orders issued by the State Government an inquiry will have to be made by the State Government before issuing the exemption order to find out whether the programme that is to be held or the performance which is to be held is entitled to exemption under the general orders of the Government. In the sense that the
Government will have to find out whether the public performance/function is Indian classical dance or folk dance etc.
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7 Perusal of the order impugned in this Petition shows that though the two Government Resolutions dated 23 October 1972 and
30 July 1977 have been referred to, neither there is any discussion to be found in the order nor is there a finding recorded that considering the contents of the programme, it is entitled to exemption under those Government Resolutions. In our opinion, even for consideration of the case of Respondent no.4 for exemption under the general orders issued by the Government, it was necessary for the
Government to hold inquiry into the contents of the programme, in relation to which exemption is sought to record a finding that
Respondent n.4 is entitled to exemption under the general orders issued by the Government. In our opinion, therefore, the order of the
Government granting exemption suffers from nonapplication of mind to relevant aspect. It further appears that the Government also allowed irrelevant considerations to enter its mind in granting exemption. If the Government is granting exemption under sub section (3) of Section 6, obviously it cannot take into consideration the purpose which is relevant for granting exemption under sub sections (1) and (2) of Section 6, because the power to grant exemption from payment of entertainment duty, if the proceeds are going to a charitable purpose, is vested in the Commissioner of Police
::: Downloaded on - 09/01/2021 12:48:58 ::: 11 wp-2338-96.sxw or District Magistrate and there is elaborate scheme to be found in subsections (1) and (2) for the exercise of that power. In any case, it was for the Government to decide, if according to the Government, it had the power to grant exemption from payment of entertainment duty because the programme is being held for the benefit of a charity and then record a finding that though the power is vested in the
Collector to grant exemption for that purpose, it still can exercise that power. In the absence of application of mind to that aspect of the matter by the Government, in our opinion, the order of the State
Government impugned in the Petition is vitiated for allowing apparently irrelevant consideration to enter its mind. We, thus, find that the order of the State Government is liable to be set aside for nonapplication of mind to relevant aspects of the matter and considering the matters which are not exactly relevant for the purpose. It was submitted before us that the order of the State
Government has been made with malafide intention to favour Shiv
Udyog Sena which, according to the Petitioner, owes allegiance to Shiv
Sena which was then the ruling party in the State. In our opinion, however, as we find that the order is vitiated for nonapplication of mind, it is not necessary to go into that aspect of the matter.
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8 It was also urged before us that subsection (3) of Section 6 vests drastic power in the State Government without laying down any guidelines for the exercise of that power and, therefore, the provisions of subsection (3) of Section are liable to be struck down. Merely because in a particular provision of law which vests power, there are no guidelines given or provisions made regulating the exercise of that power, vesting of that power may not be termed as arbitrary because it is possible to find guidelines laid down in the Scheme of the enactment itself. However, in our opinion, whether it is so in the present or no, is not necessary to be examined in this Petition because the order impugned in the Petition is vitiated for nonapplication of mind as observed above. Therefore, we do not propose to go into the aspect as to the validity or otherwise of the provisions of subsection
(3) of Section 6 in this Petition. In our opinion, it would be appropriate for the State Government to reconsider the application submitted by Respondent no.4 and make orders on that application afresh.
9 In our opinion, in the facts and circumstances of the case, the following order would meet the ends of justice :
ORDER
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(i) The order dated 19 October 1996 impugned in the Petition is set aside.
(ii)The State Government is directed to reconsider the application
of Respondent no.4 dated 27 September 1996 for grant of
exemption from payment of entertainment duty in accordance
with law and the observations made above. The Government
shall do so as expeditiously as possible and in any case within a
period of eight weeks from today.
(iii)The State Government shall, before disposing of the
application, grant an opportunity of being heard to Respondent
no.4 as also the Petitioner.
(iv)Whatever order the State Government proposes to make shall
be by a reasoned order.
(v)The amount which lies deposited in this Court to which we have
referred above, shall continue to lie in this Court. The State
Government, while disposing of the application dated 27
September 1996 make appropriate order in relation thereto.
(vi)It is clarified that in case the State Government decides not to
grant exemption from payment of entertainment duty, then in
that event the State Government shall hold inquiry into the
aspect as to how much amount is liable to be paid by
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Respondent no.4 towards the entertainment duty.
(vii)The State Government shall permit Respondent no.4 and the
Petitioner to make any written representation in that regard
before it makes fresh order pursuant to this order.
10 Rule is made absolute accordingly in the above terms. There shall be no order as to costs.
(ANOOP V. MOHTA, J.) (D. K. DESHMUKH, J. )
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