In a setback to the casino industry in Goa, a division bench of the Bombay High Court (Goa Bench) comprising of Justices Bharat P. Deshpande and MS Sonak rejected interim relief in writ petitions filed by Delta Corp Limited and its subsidiaries (operating Deltin Royale, Deltin Jaqk, Deltin Suites and Kings Casino in Goa) as well as other casino companies seeking relief from payment of Annual Recurring Fees (ARF) payable by casinos during the shutdown of operations during the covid period.

The casino companies, through their senior counsels Dr. Abhishek Manu Singhvi, Darius Khambhata, Nikhil Sakhardande, and advocate Parag Rao, while relying on judgments of Madras and Delhi High Courts that argued that the charging of ARF during covid period where the casinos were forced to shut down due to orders of the government is arbitrary and unreasonable. They further contended that there is a difference between the levy of tax and a fee, which is imposed for some services rendered.

The casino companies also contended that in addition to license fees payable during the covid period, the imposition of 12% penal interest even during the covid period is irrational, arbitrary and unconstitutional.

Advocate General of Goa DJ Pangam, while opposing interim relief, noted that casinos had been merely granted an extension in payment of license fees while they were closed during covid period and, by a notification dated 25th November 2022, have asked the casinos to pay license fees during the period for which fees was not paid by 30th December 2022.
The court, in its order, referring to a previous Supreme Court decision, noted that the distinction between taxes and fees has been obliterated to a great extent in recent jurisprudence and an element of quid pro quo is not necessarily required for imposition of a fee by the state government.

The bench also noted that similar relief of not payment of license fees to bars and restaurants of Goa during the covid period was also not granted by the court previously and noted that if casinos pay the ARF under protest, a case of financial ruin or imminent closure of operations is not projected. Therefore, the court noted that the petitioner casino companies cannot avoid paying the ARF even for the period of covid shutdown and rejected any interim relief for the same.

The court, however, noted that the demand for 12% penal interest on ARF when the state government itself had granted relaxation and noted it would convey the date by which payment of license fees has to be made subsequently is unjustified; and hence restrained the state government from recovering penal interest for ARF not paid during the closure period.

The bench, however, noted that the observations are only limited to the rejection of the grant of relief at the interim stage and agreed to consider various aspects of unreasonableness and arbitrary imposition of ARF during the covid period in the final hearing while directing the state government to file its reply within eight weeks and petitioner-casinos to file their rejoinder within four weeks thereafter.