1. Through this Const. Petition show-cause notice dated July 8, 2008, issued by Deputy District Officer, Entertainment Wing, Karachi, has been challenged on the ground that the entertainment duty, demanded by such notice is contrary to Section 8 of the Entertainment Duty Act, 1958 ("Act, 1958") as well as to the past practice.
2. Learned counsel for the petitioner-Board Mr. Taffazul H. Rizvi submits that the petitioner-Board has been organizing matches since 2005 and no entertainment duty has been paid for the reason that they were exempted in terms of Section 8 of Act, 1958. He further submits that Pakistan Cricket Board ("the Board") is spending more than earning from the matches and entire earning from the matches is being spent towards the promotion of the sports while more amount has been arranged by the Board to flourish the sports. He has pointed out that the total earning, which has been calculated from the Asia Cup-2008 comes to Rs, 3.5 million while the demand for tax has been raised to Rs, 3.8 million and that too is not leviable. He further submits that no opportunity was provided to the petitioner nor any accounts were gone through and notice has been issued contrary to the law.
3. On the other hand, learned AAG submits that entertainment duty has been levied keeping in view Section 8 of Act, 1958 at the rate of 5% of the total earning from the matches. He further submits that it is the discretion of the Government to grant exemption or not and that in this case no exemption has been granted. He further submits that in the past the Board agreed to pay the amount and had sent a cheque for the sum of Rs, 2 million and that the Board also issued a letter dated July 19, 2008 undertaking thereby for payment. He further submits that entertainment duty is payable until properly been exempted under the law.
4. Learned counsel Mr. Taffazul H. Rizvi on the point of deposit of cheque as well as letter dated July 19, 2008 has replied that the cheque has been issued keeping in view the past practice when a cheque for a tentative amount uses to be issued but the same is to be returned as no duty is payable while the letter was issued with the intention that the matter be settled but no where it has been promised that the amount is agreed to be paid.
5. After hearing learned counsel at length we have observed that the demand letter dated July 7, 2008 is in respect of Rs, 3,815,866/-, which has been followed by the impugned show-cause notice dated July 8, 2008. The amount as mentioned in the show-cause notice is stated to be approximate and no figures for calculation of the excise duty are available. If this amount, which is claimed to be 5% of earning, is considered then the total amount of the Board's earning would go in crores of rupees. The cheque of Rs, 200,000/- by petitioner might have been issued keeping in view the past practice of it being returned, therefore, until the issue is decided it loses its validity and may be returned back.
6. We have also observed from the letter dated July 7, 2008 that the complete summary of the amount of entertainment duty involved in each match played in National Stadium has been called from the petitioner. All this shows that the respondents have no record to calculate the duty and tentative assessm ent towards the excise duty, which is to be calculated strictly in accordance with law.
7. We have observed that under Section 8 of Act, 1958 specific exemptions have been given from the entertainment duty if the proceeds are being spent towards the charitable purposes, educational or sports etc. while it has not been denied that the petitioner has been organizing the matches since the year 2005 but no entertainment duty has been demanded so far by the respondents, which to some extent supports the contentions of the petitioner's counsel. In such a situation we find that the issue of exemption as well as calculation of the entertainment duty are to be scrutinized. Hence we do not approve the demand notice dated July 7, 2008, issued by Deputy District Officer, Entertainment Wing Karachi, followed by impugned show-cause notice dated July 8, 2008 but direct the respondents to issue notice to the petitioner for calling of their entire record and thereafter will calculate the taxes and before making a demand on that will see their past practice as to why the entertainment duty was not demanded from them from the year 2005 and whether the petitioner falls under the exemption. This is to be calculated keeping in view the factual position submitted by the petitioner with explanation towards this expenditure. It is further observed that the order of the respondents should be a speaking order as required under Section 24-A of the General Clauses Act. This exercise is to be completed by the respondents within a period of two months from today.
8. Const. Petition No, 1525/2008 is disposed of in the above terms alongwith Misc. 7208/2008.