• Notification Date: 01-11-2023
• Notification No: N/A

No Final Order on GST to Casino Firm sans HC nod: Tax Dept

The Goa Bench of the Bombay High Court on Monday restrained tax authorities from passing any final order on the GST notices seeking payment of alleged tax shortfall issued to the casino gaming company Delta Corp Limited. 

The court also issued a notice to the Centre, saying that a section of the Central Goods and Services Tax Act has been challenged in Delta Corp’s plea against the notices. 

According to regulatory filings, in September, Delta Corp and subsidiaries had received notices for payment of alleged tax shortfall to the tune of Rs 16,822 crore from the Directorate General of GST Intelligence, Hyderabad, for the period between July 2017 and March 2022. Last week, a subsidiary of the company received a notice for the payment of tax shortfall to the tune of Rs 6,384 crore from the Directorate General of GST Intelligence, Kolkata. 

The company, which operates casinos in Goa and Sikkim, and its two subsidiaries–Highstreet Cruises and Entertainment Private Limited and Delta Pleasure Cruise Company Private Limited–filed writ petitions challenging a notice dated September 27. 

The company has argued that the tax amount mentioned in the notices was based on “the gross bet value of all games played at the casinos”. 

“Demand of GST on gross bet value, rather than gross gaming revenue, has been an industry issue and various representations have already been made to the Government at an industry level in relation to this issue,” the company said in regulatory filings. 

In an order on Monday, a Division Bench of Justices Bharat P Deshpande and M S Sonak said the petitions challenged Rule 31A of the CGST Rules, 2017. “There is also a challenge to section 15(5) of the CGST Act and to certain notifications and circulars issued under the CGST Act and rules made thereunder,” the court said. 

The senior standing counsel appearing for the tax authorities said they would not pass any final orders on show cause notice without the court’s permission. 

“This statement about not passing any final orders on the impugned show cause notice is accepted and the concerned respondents will have to abide by the same,” the court said. 

Senior advocate Harish Salve, who appeared for the petitioners, submitted that they would file a response to the show cause notice by December 15, 2023. 

The court will now hear the matter on February 5, 2024. 

After the proceedings, Salve said, “The challenge is to the imposition of service tax based on the amount of betting that takes place… not what the casino earns or not on what chips are sold… The contention is you can’t impose this tax under GST law. Today, the court has admitted the petition. In the meanwhile, there are other factual details on which we will file a reply…” A senior official of Delta Corp said, “The court has given a relief in a limited sense at this point of time.” In July, stakeholders of the casino industry in Goa had criticised the GST Council’s decision to levy a uniform 28% tax on “full face value” for online gaming, casinos and horse-racing, calling it “illogical”.