By Apoorva Mandhani, Symbiosis Law School, Pune.
Sunburn, as is common knowledge, is India’s premier electronic music brand hosting Asia’s largest 3-day Electronic Music Festival in Goa. It has been a success since its inception, with the Festival being a part of the bucket list of the Indian youth.
However, the dark side of the Festival is yet to be unveiled. The Sunburn Scam is alleged to have burned the Goa Government’s pockets, by evading tax amounting to almost 90%.
The scam was unearthed back in December, 2012, by Mr. Sandesh Prabhudesai of HCN TV. The organizers, Shailendra Singh of Percept, in partnership with Nikhil Chinappa, were roped into the controversy, after which, the Commissioner of Commercial Taxes (CCT) began monitoring the sale of tickets personally.
A team of officers was deployed by the CCT at the ticket counters. 15% of this amount has to be lawfully submitted to the Government of Goa as entertainment tax on the sale of tickets.
The Basic Math[1]
HCN TV managed to blow the lid off the scam by employing some basic math. It was reported a year before the scrutiny, that Shailendra Singh, Managing Director of Percept had declared that Sunburn had attracted a massive crowd of one lakh music lovers. The price for the ticket was averagely pegged at Rs. 8000 for all the three days. Hence, even excluding any possibility of exaggeration, a crowd of 90,000 would also have earned revenue of Rs. 72 crore for the Festival.
With that calculation, the Organizers were supposed to pay Entertainment Tax amounting to Rs. 10.80 crore to the Government. Percept, however, parted with only Rs 1.16 crore towards Tax. This means a shortfall of Rs. 9.64 crore, which rightfully belonged to the Goa Government. It was the Tax that Goa Government was wrongfully ripped off.
The average price of a three-day ticket was Rs. 8,855 in 2012, with the organizers expecting around 2.5 lakh people attending the three-day Festival. Even if the crown does not grow beyond one lakh, the ticket revenue would be around Rs 88.55 crore. Goa should thus get tax revenue of at least Rs 13.28 crore.
The seasonal ticket price is actually higher, pegged at Rs 3450 on the first day, Rs 4600 on the second day and Rs 6900 on the third day. If these prices are monitored properly, the actual tax revenue would go much higher.
This exposure had compelled the Commissioner of Commercial taxes to employ more men at the ticket counters in order to check any such tax evasion.
SpeakGoa
The matter was lashed out again in March, 2013, with the social action forum, SpeakGoa, which was in the process of collating evidence, in order to approach Bombay High Court, with help from a former Goa Pradesh Congress Committee (GPCC) President and some Congress MLAs praying for a judicial inquiry into the alleged tax evasion. [2]
Making a very powerful statement, Salvador De Costa, Convener of the anti-corruption social forum, had said, ““the Manohar Parrikar-led government in Goa has overlooked and turned a blind-eye to the allegations of bribery and tax evasion of about Rs 15 crore. Through the press and media and through letters to the government, our members and activists have asked questions regarding tax collections and the number of passes sold, etc. The government has not come up with any satisfactory answers till date. As per our figures, approximately about Rs 5 core were distributed as bribes, kickbacks and other freebees and given out as largesse to various government and police officials, including MLAs and others in positions of power to enable the event to go on “smoothly” and to ensure that the organizers were not pulled up on any minor or major counts at the last moment or while the event was in progress. Even the opposition parties raked up the issue in Dec 2012, but the government did not provide any satisfactory answers or explanation for the loss in revenue.”[3]
Under this chain of allegations, the corruption involved in the organization of the scam was highlighted. According to the Organizers, the sale of free passes had witnessed an increase of over 200% during 2012. SpeakGoa however alleged that these passes were sold in black by some Officials of the Tourism Department, in collusion with Senior Government Officials, thereby causing a huge loss to the State Exchequer.
However, SpeakGoa seems to have abandoned the cause, with no PIL filed by it in the Court, with the change in leader ship at the Goa Pradesh Congress Committee.
PIL in Bombay High Court
A PIL was nevertheless filed in December, 2014 by Congress party’s Goa spokesman Sunil Kawathankar. The PIL had prayed to grant a stay on Sunburn for the year 2013. A Single Bench of Justice Anuja Prabhudesai had however, refused to grant any interim relief, fixing the matter for January, 2015.
In addition to the aforementioned allegation, the Petition alleges that the sale of online tickets goes un-monitored, even though these tickets are differently priced. The Petition had made the State Government, Goa State Pollution Control Board, State Commercial Taxes department and Percept, which organizes Sunburn as Respondents.[4]
The outcome of this PIL is eagerly awaited.
Government’s Assessment
In a reply to an RTI Application filed by NCP’s Goa Spokesperson Trojano D’Mello, the State Commercial Taxes Department has replied that it is yet to assess the tax payable by Sunburn for the year 2012-13 and 2013-14.
The reply furnished by Additional Commissioner of Commercial Taxes, Dipak Bandekar took cover under Section 8 (d) of the RTI act, read with section 9 (B) of the Goa Entertainment Tax Act.[5]
Section 8(d) of the RTI Act grants exemption from disclosure to protect the competitive position of a third party. Disclosure can however be compelled on the ground of public interest.
The arbitrary fee of Rs. 1 crore was also questioned as arbitrary by NCP’s Goa Spokesperson. He further demanded a law on taxation for music festivals.[6] Further, it was suggested that random blood tests at the music festivals to see whether drugs are being consumed.
The route ahead
According to Entertainment Tax Rules, the tickets should be declared and tax paid in advance on the tickers printed and put out for sale. A copy of each ticket sold has to be maintained in triplicate. However, when these are sold online, proper passes or tickets are not issued in several cases. Colored ribbons are issued instead. This should hence be facilitated by way of putting regulations in place.
Another report submitted by the Superintendent of Police (Traffic) Vijay Singh to the North Goa District Collector pertaining to the festival in 2012, suggested that the organizers of Sunburn had used minor children to conduct traffic duties during the three-day event, which attracts hundreds of thousands of music lovers. Sunburn’s promoters however refused to comment on the issue.[7] No further update has been received on this report.
The issues associated with the Festival are plenty, roping in several high profile people. The outcome of the PIL in Bombay High Court seems like the logical recourse in the current times, with all music lovers of the country praying for the Festival to come clean on one hand, and the Government scrounging for its money on the other.
[1] “HCN TV uncovers hefty Percept tax evasion scam with Sunburn”, Available at: http://www.targetgoa.com/goabuzzdet.php?bzid=4583&&id=
[2] “Tamankar blasts Parrikar-led BJP govt on Sunburn Scam”, available at: http://www.newswala.com/India-National-News/Tamankar-blasts-Parrikar-led-BJP-govt-on-Sunburn-Scam-31781.html
[3] “Press Release: PIL against Sunburn Scam Allegations”, Available at: http://permalink.gmane.org/gmane.culture.region.india.goa/144020
[4] “HC refuses to stay Goa Sunburn, beginning tomorrow”, Available at: http://www.goanews.com/news_disp.php?newsid=5506
[5] “Goa government yet to assess tax paid by Sunburn EDM in last 2 years”, Available at: http://articles.economictimes.indiatimes.com/2015-01-14/news/58065957_1_goa-government-tax-evasion-total-tax
[6] “Goa govt goes soft on tax collections at EDM festivals as State loses precious revenue”, Available at: http://news.indyanewz.com/goa-govt-goes-soft-on-tax-collections-at-edm-festivals-as-state-loses-precious-revenue/
[7] “http://www.indiagazette.com/index.php/sid/228687877”, Available at: http://www.indiagazette.com/index.php/sid/228687877