The Lakmé India Fashion Week, organised by the Fashion Development Council of India, has been in the news, not so much for what it aims to achieve but because of the recurrent controversies associated with it.
Touted as a move to place India on the fashion calendar of the world and to provide an impetus to fashion tourism and the domestic industry, the LIFW has been embroiled in a series of controversies since its inception.
The exemption from entertainment tax granted by the Delhi government is the latest controversy to hit the LIFW and ensures that the fashion extravaganza remains in the news for all the wrong reasons.
The Delhi Entertainment and Betting Tax Act, 1946, says that entertainment tax can either be levied with reference to the ticket sales or to the sponsorship amount where there are no ticket sales.
It further empowers the government of the National Capital Territory of Delhi to exempt any individual or class of entertainment programmes from the liability to pay entertainment tax where such activities are propelled by a desire for the promotion of arts, culture or sports.
Further, the exemption can also be extended to entertainment activities, if they bear an educational character, are carried on for scientific purposes, promote agriculture or manufacturing activities, or are undertaken by non-profit making bodies.
In those cases where the activities are conducted with a profit-making motive, the exemption can be granted only if the proceeds thereof are devoted entirely to philanthropic, religious or charitable purposes.
The decision of the Delhi government to grant entertainment tax exemption to the LIFW needs to be looked at from two angles. The first aspect relates to whether the activities proposed to be exempted fall within the legal ambit of the exemptions.
Second, whether, given the history of the LIFW, the legal controversies associated with it, and the fact that the matter is already sub-judice, it was appropriate for the Delhi government to grant exemption.
One does not have to go far to seek an answer to whether the LIFW actually deserves to be granted entertainment tax exemption on legal grounds. The history of the LIFW and a look at all media reports will make it clear that the event partakes of the character of a sophisticated five-star tamasha, giving another opportunity for the city's glitterati and P3Ps to drink, party and make merry.
These activities can scarcely be deemed to fall within the category of either the promotion of art/culture/sport or of an educational character or promoting scientific purposes/public health or the interests of agriculture/manufacturing industry or its associated activities.
Nor can these activities be said to be propelled by a desire to push philanthropic, religious or charitable purposes. Proponents may say that the LIFW is motivated by the desire to place India on the fashion map of the world, at par with other major centres and, consequently, provides the much-needed support and boost to the domestic fashion and garment industry.
However, lofty as these ideals may seem, it would be clear to any dispassionate and neutral observer who has been tracking the LIFW since its beginning that it can by no stretch of imagination fall under any of the areas that can legally be covered by the exemption.
Indeed, if a gathering of celebrities spread over a couple of days is to be classified as a philanthropic/educational activity and so on, it would be stretching the limits of judicial interpretation beyond the imagination of normal human intelligence.
That apart, the propriety of the Delhi government in granting exemption at a stage when the issue is already sub-judice needs to be deliberated.
Given the history of the LIFW in first obtaining an exemption from the government of Maharashtra, it reneged from the commitment to hold the annual jamboree in Mumbai. The timing of the decision--considering the present politically-charged scenario--is also suspect.
Nevertheless, the controversy over the LIFW apart ,there are lessons to be learnt from the entire episode, the most important of which being the need to frame a set of well-defined, coherent, logical and, above all, transparent guidelines and policies to deal with such issues and prevent such needless controversies in the future.
The writer is a chartered accountant.
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