HC seeks govt reply on DDCA plea against entertainment tax law

New Delhi: Delhi High Court on Thursday sought the AAP government's response on DDCA's plea challenging the latest changes in Delhi's entertainment tax laws providing for levying tax on sponsorship and advertisement revenue retrospectively from 1998.

A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva issued notice to the Delhi government and sought its reply on a plea by Delhi and District Cricket Association (DDCA) which has sought quashing of the amendments to the Delhi Entertainment and Betting Act that seek to levy tax on sponsorship and advertisement revenue from 1998.

DDCA, represented by senior advocate Sandeep Sethi and advocate Sangram Patnaik, contended that retrospective imposition of tax was "unconstitutional and unreasonable".

The lawyers said that DDCA has already paid over Rs eight crore from 2009 onwards as entertainment tax and from 2000 to 2008, it was exempted from the Act.

According to DDCA's plea, the recent demand of over Rs 23 crore as entertainment tax by Delhi government was on the advertisement and sponsorship revenue earned during the period from 2003-2009 during which these were not chargeable.

Patnaik contended before the court that the amendments of this year created an "absurd situation" where DDCA, which only collects the tax from persons making the payment, will now have to claim entertainment tax from the sponsors/advertisers for the period of 2003-2009.

Apart from quashing of the amendments, DDCA has also sought setting aside of Delhi government's assessment order of October 23, as per which it has to pay entertainment tax of over Rs 23 crore.

While issuing notice to the government, the court directed it not to take any coercive steps against DDCA and to not withhold the no-objection certificate for the upcoming India-South Africa test at Feroz Shah Kotla stadium here.

The court passed the order after DDCA agreed with the court's direction to deposit Rs one crore with the Excise, Entertainment and Luxury Tax Department in two instalments of Rs 50 lakh each.