• Notification Date: 22-07-2023
  • Notification No: N/A

Casinos in Goa and Sikkim involved in Tax Evasion of Rs 10,000 crore

The Directorate General of GST Intelligence (DGGI) has trained its focus on about a dozen casinos operating in Goa and Sikkim. The DGGI has alleged a staggering Rs 10,000 crore in tax avoidance by these establishments, leading to intense ongoing investigations. 

According to sources close to CNBC-TV18, the DGGI investigations are centred on two key aspects: the wrongful payment of GST at a lower rate of 18 percent instead of the mandated 28 percent, and the misuse of Input Tax Credit (ITC) through fraudulent claims. 

Delta Corp, the only listed casino gaming company in the country, sided more than three percent from intra-day highs on the report. 

The controversy surrounding the tax payments by casinos stems from a lack of clarity in the tax law. Some establishments took advantage of the ambiguity in the law and remitted GST at a lower rate of 18 percent. 

It was only after the 50th GST Council meeting that the tax rate for casinos was clarified and set at 28 percent. Unfortunately, this clarification came too late for several casinos already under the DGGI's scanner for investigations that had commenced before the decision was made. 

Earlier this month, Revenue Secretary Sanjay Malhotra reported that the real money gamey games were always rated at 28 percent and the announcement post the GST Council meeting was only a clarification. 

“28% entry as it reads today, without any clarification and without any retrospective amendment, will be subject to litigation and judicial review as the phrase ‘game of chance’ is used in the entry. Every word used to impose higher tax is relevant for a supply to fall within the purview of such an exorbitant tax”, said Abhishek A Rastogi, founder of Rastogi Chambers, who has been representing casinos and online gaming companies before different courts. 

“The bigger dispute will remain the valuation and the tax on face value cannot be justified retrospectively. Such valuation will certainly be subject to judicial review”, added Rastogi.