Declining to interfere with the imposition of entertainment tax on ramp shows organised by the Fashion Design Council of India (FDCI), Delhi High Court has said it is for the government to decide whether full or part exemption can be given to similar events held in the capital.
Judicial review was limited only to the examination of the decision-making process and not to look into the correctness of the decision of the executive, observed a division bench consisting of Justice Sanjiv Khanna and Justice R.V. Easwar.
“It is a matter which is within the domain of the executive, and judicial review is limited to examining whether the relevant criteria have been kept in view and whether the decision making process has been just and fair,” the court held in its ruling April 13 which has been made available only now.
The court’s directions came on a plea filed by the FDCI challenging a Sep 10, 2009, government order rejecting its request for 100 percent exemption from entertainment tax on its all fashion shows.
The division bench, while declining to interfere with the 50 percent levy of entertainment tax on fashion shows organised in the capital, said: “Whether to grant exemption to the fashion events from entertainment tax or not is a discretionary power granted to the Government of NCT of Delhi.”
The court, however, stated that the discretion is controlled by the various criteria under the Delhi Entertainment and Betting Tax (DEBT) Act, 1996.
“We will be going for a legal opinion on this. Internally we may decide moving to a more friendly place around Delhi that has a more conducive environment for the business of fashion,” FDCI President Sunil Sethi said.
The FDCI, which organises the Wills Lifestyle India Fashion Week and other fashion shows, had claimed that these are not ticketed events and that entry was exclusively by invitation, both for domestic and international buyers, associated professionals and the media. It was granted 100 percent exemption from paying entertainment tax under the DEBT Act, 1996, for the events held between 2002 and 2004.
The Delhi government later refused to grant full exemption from entertainment tax for all subsequent fashion events.
The FDCI had applied for tax exemption for the fashion weeks organised by it between October 2008 and March 2009 in Delhi. The government, considering the recession in the industrial and export sectors and to project Delhi as a world class city in view of the then forthcoming Commonwealth Games, granted it 50 per cent exemption from entertainment tax on fashion shows “as a special case”.
Tax exemption was also granted for the Van Heusen India Men’s Week held in September 2009. The government, however, clarified that future events planned by the FDCI would not be tax exempt.
The FDCI had contended that a fashion show was not “entertainment” under the DEBT Act. The Additional Entertainment Tax Officer (AETO) had however held that it was an exhibition of designs and clothing and would amount to a performance by models on the ramp and thus amounts to “entertainment”.
