A division bench of the Bombay High Court (Goa Bench) comprising Justices MS Sonak and Bharat P. Deshpande heard writ petitions filed by casino and gaming company Delta Corp Limited and its subsidiaries Delta Pleasure Cruise Company Private Limited and Highstreet Cruises and Entertainment Private Limited today challenging the GST showcause notices worth over Rs. 16,000 crores issued to it by the Directorate General of GST Intelligence (DGGI).
Senior counsel Harish Salve appearing on behalf of writ petitioner Delta Corp and its subsidiaries submitted that the petitioners were paying taxes on the basis of Gross Gaming Revenue (GGR). Elaborating on the concept of GGR, Salve stated that at the end of every day, the casino wins or loses against the players on every bet of blackjack, roulette or other games; or in games like poker charges a small service fee that is retained by the casino in exchange for allowing the use of table, chips and other facilities.
Salve noted that in the pre-GST era, states had the right to tax gambling and betting and such tax, in the two states that allowed casinos, viz., Goa and Sikkim, was done on the basis of GGR. He further stated that players gambling or betting was neither supply of goods nor of services and therefore GST was inapplicable on the activity.
He further stated that Rule 31A of the Central GST Rules, which states that tax has to be paid on the face value of bets in the case of chance to win in gambling and betting as well as certain circulars and notifications have been challenged by the petitioners as being ultra vires beyond the scope of Sections 7,9 and 15 of the Central GST Act.
The counsel appearing for DGGI, Goa GST Commissioner, GST Council and some other respondents submitted that they would not take any coercive action against the company and neither will any final order be passed in the showcause notices issued to the writ petitions.
Recording the respondents’ submissions, the bench issued notices to all respondents as well as the Attorney General of India. The court asked the respondents to file their replies within six weeks and granted four weeks thereafter to the petitioners to file their rejoinders to the government’s response. The bench thereafter listed the matter for final disposal on 5th February 2024, high on board. The High Court’s order gives a much-needed breather and relief to Delta Corp, which has over the past few weeks being flooded with a flurry of tax notices.
Last week, on 20th October 2023, the Sikkim High Court had also granted reprieve to Delta Corp by order status quo in the Rs. 628 crore showcause notice issued to its Gangtok casino Deltin Denzong.