Delta Corp receives Rs 16,822 crore GST tax notices from Directorate General of GST Intelligence.

In a significant development, Delta Corp, one of India's prominent casino operators, has been slapped with GST (Goods and Services Tax) demand notices totaling a staggering Rs 16,800 crore. This eye-watering sum represents the alleged underpayment of GST for the period spanning July 2017 to March 2022. While this is undoubtedly a severe blow to the company, Delta Corp has affirmed its intention to fight back through legal channels, setting the stage for a high-stakes legal battle.

Key Points

Key Points	Details
GST Demand Amount	Rs 16,800 crore
Period of Alleged Underpayment	July 2017 to March 2022
Breakdown of GST Demand	- Delta Corp: Rs 11,140 crore - Subsidiaries: Rs 5,682 crore
Basis of GST Calculation	Gross bet value of casino games played during the period
Delta Corp's Response	- Intends to contest the tax demands - Considers the demands arbitrary
Industry-Wide Concerns	- Gaming industry shares concerns about GST calculation method - Representations made to the government
Impact on Delta Corp's Shares	- Approximately 29% decline since announcement of new GST rates
Comparative Cases	- Gameskraft faced a demand of Rs 21,000 crore, currently before the Supreme Court
New GST Rates	- 28% GST on online gaming, casinos, and horse racing, effective from October 1, 2023
Broader Implications	- Highlights the need for clear and transparent tax policies in the gaming industry

 

The Shocking Figures

The Directorate General of GST Intelligence issued these monumental notices, delivering a substantial financial blow to Delta Corp and its subsidiaries. A substantial portion of the demand, approximately Rs 11,140 crore, was raised directly against Delta Corp, while the remaining Rs 5,682 crore was directed at three of its subsidiaries: Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises.

The tax demand is based on the gross bet value of all casino games played during the specified period, rather than the more conventional gross gaming revenue method. This discrepancy has not only rattled Delta Corp but also highlights broader industry concerns regarding the tax structure.

 

Notice Received by	Amount of  Alleged Tax Shortfall
Delta Corp Limited (Casino Deltin Denzong, Sikkim)	INR 6,28,20,31,726 (Rupees Six Hundred and Twenty-Eight Crore Twenty Lakh Thirty-One Thousand Seven Hundred and Twenty-Six)
Highstreet Cruises and Entertainment Pvt. Ltd. (Subsidiary of Delta Corp)	INR 32,89,94,41,744 (Rupees Three Thousand Two Hundred and Eighty-Nine Crore Ninety-Four Lakh Forty-One Thousand Seven Hundred and Forty-Four)
Delta Pleasure Cruise Company Private Limited (Subsidiary of Delta Corp)	INR 17,65,21,80,638 (Rupees One Thousand Seven Hundred and Sixty-Five Crore Twenty-One Lakh Eighty Thousand Six Hundred and Thirty-Eight)

 

Delta Corp's Response

Delta Corp has unequivocally declared its intention to contest these tax demands in a bid to protect its interests. The company has asserted that the GST notices are arbitrary and contrary to the law, and as such, it will pursue all available legal remedies to challenge these demands and the associated proceedings.

In a statement, Delta Corp emphasized that this issue is not unique to the company but is, in fact, an industry-wide concern. The company cited representations made by various stakeholders to the government on the subject, underscoring that the demand for GST on gross bet value, as opposed to gross gaming revenue, has been an ongoing issue in the gaming industry.

 

Industry-Wide Implications

The impact of this development goes beyond just Delta Corp. It draws attention to a broader problem in the gaming industry, where operators and authorities grapple with the complexities of tax regulations. The government's decision to impose a 28 percent tax on online gaming, casinos, and horse racing further underscores the challenges faced by the sector.

This tax, set to come into effect from October 1, 2023, has already affected the market value of Delta Corp's shares, which have witnessed a substantial decline since the announcement of the new GST rates. The company's stock has lost approximately 29 percent of its market value, reflecting investor concerns about the industry's financial stability.

 

Comparative Cases

The case of Delta Corp is not unique. In a similar vein, last year, the GST department demanded Rs 21,000 crore from Gameskraft, a Bengaluru-based online gaming company. This matter is currently under consideration by the Supreme Court, which upheld the Karnataka High Court's judgment quashing the tax notice.

 

FAQS

1. Why did Delta Corp receive GST demand notices?

• Delta Corp received GST demand notices totaling Rs 16,800 crore due to alleged underpayment of Goods and Services Tax (GST) for the period between July 2017 and March 2022.

2. What is the breakdown of the GST demand between Delta Corp and its subsidiaries?

• One notice amounting to Rs 11,140 crore was raised against Delta Corp itself, while another notice of Rs 5,682 crore was raised against three of its subsidiaries: Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises.

3. On what basis was the GST demand calculated, and why is it contentious?

• The GST demand is based on the gross bet value of all casino games played during the specified period, rather than the more conventional gross gaming revenue method. This method is contentious and has been a subject of industry-wide concern.

4. How has Delta Corp responded to these GST demands?

• Delta Corp has expressed its intention to challenge these tax demands in court. The company stated that it considers the demands to be arbitrary and contrary to the law, and it will pursue all available legal remedies to contest them.

5. Why does Delta Corp argue that this is not just their problem but an industry-wide issue?

• Delta Corp highlighted that the issue of GST on gross bet value, instead of gross gaming revenue, is a concern shared by the broader gaming industry. It noted that various representations have been made to the government at an industry level regarding this issue.

6. How has the announcement of the new GST rates affected Delta Corp's market value?

• Delta Corp's shares have seen a significant decline, losing approximately 29 percent of their market value since the government announced the new GST rates, which are set to come into effect from October 1, 2023.

7. Are there other similar cases in the gaming industry regarding GST demands?

• Yes, there is a similar case involving Gameskraft, a Bengaluru-based online gaming company. Gameskraft was asked to pay Rs 21,000 crore in GST, and this matter is currently before the Supreme Court.

8. What is the expected impact of the new 28 percent GST on online gaming and casinos?

• The 28 percent GST on online gaming, casinos, and horse racing is expected to come into effect from October 1, 2023. It has raised concerns within the industry and has led to legal challenges, as it could significantly impact the financial stability of gaming operators.

 

Delta Corp's staggering GST demand notices have thrown a spotlight on the intricacies of taxation within the gaming industry in India. While the company vows to seek legal recourse, the broader implications for the industry remain uncertain. This development underscores the need for clear and transparent tax policies that can accommodate the unique dynamics of the gaming sector, ensuring fairness and stability for all stakeholders. As the legal battle unfolds, the gaming industry and tax authorities will closely watch the outcome, which could potentially set a precedent for the entire sector.