Delta Corp, a prominent Indian gaming company, has been granted interim relief by the High Court of Calcutta in response to a tax demand issued by the Directorate General of GST Intelligence, Kolkata. The tax authority sought a payment of Rs 6,384 crore (US$766 million), alleging a shortfall in goods and services tax. With the claimed amount nearly double Delta Corp’s market cap at the time, the company highlighted that the demand was based on the gross bet value of all casino games, echoing recent moves by India’s GST Council to impose a 28% tax on gaming deposits nationwide. Delta Corp vows to explore all legal avenues to contest the demand.
Tax Demand and Industry Concerns:
The Directorate General of GST Intelligence, Kolkata, issued a demand for Rs 6,384 crore from Delta Corp, citing an alleged shortfall in goods and services tax related to the gross bet value of all games played at the casinos during the relevant period.
Delta Corp emphasized that the industry had raised concerns about the demand for GST on the gross bet value, rather than gross gaming revenue, and had made representations to the government on this matter.
Legal Remedies and Industry Challenges:
Delta Corp expressed its commitment to pursue all legal remedies to challenge the tax demand, recognizing it as an industry-wide issue.
The gaming company’s market cap was approximately US$420 million at the time, making the demanded amount significantly higher.
High Court Interim Relief:
The High Court of Calcutta has granted interim relief to Delta Corp’s subsidiary, Deltatech Gaming Ltd. The relief directs that no effect shall be given to any order passed by the Tax Authority regarding the show cause notice for the above demand without the leave of the Hon’ble High Court.
This interim relief provides a temporary respite for Delta Corp as it navigates the legal complexities of the tax dispute.
Similar Cases and Temporary Stay:
The Sikkim High Court recently issued a temporary stay on a similar demand by the Directorate General of GST Intelligence, Hyderabad. This demand sought Rs 628 crore (US$75.5 million) in back taxes for the operation of Casino Deltin Denzong, based in Sikkim.
The temporary stay indicates a pattern of legal challenges by gaming operators against substantial tax demands in India.
Delta Corp’s interim relief from the High Court of Calcutta offers a brief reprieve in its ongoing tax dispute, reflecting a broader industry concern regarding the taxation methodology applied to gaming revenues. As the company explores legal avenues to contest the significant tax demand, the outcome will likely have implications for the gaming sector in India. The parallel case in Sikkim underscores a growing trend of legal battles between gaming operators and tax authorities, shaping the regulatory landscape for the industry in the country.