In a significant development in the ongoing tax dispute involving Delta Corp and its subsidiaries, the Bombay High Court in Goa has issued an order restricting tax authorities from making definitive decisions without prior court approval. This order follows a series of show cause notices issued by tax authorities, claiming substantial tax shortfalls from the prominent casino gaming company.
Delta Corp, which operates in the competitive casino and online gaming industry, has been facing a daunting financial challenge due to these tax notices. The company’s total tax shortfall liability has surged to an astonishing Rs 16,194 crore, while its market capitalization stands at Rs 3,749 crore, leading to concerns within the financial sector.
On October 24, Delta Corp disclosed in a stock exchange filing that the Bombay High Court has examined the writ petitions submitted by both the company and its subsidiaries regarding the show cause notices. The court’s decision prevents tax authorities from taking any final actions on the tax demands without prior permission from the court.
The court has also set specific dates for the completion of legal pleadings, hearings, and the final adjudication of these writ petitions, indicating a structured legal process to address the matter.
Delta Corp Limited, along with its subsidiaries, including Highstreet Cruises and Entertainment Pvt. Ltd. and Delta Pleasure Cruise Company Private Limited, received notices detailing significant tax deficits. Delta Corp Limited faces a staggering tax deficit of Rs 11,139,61,03,423 (Rupees Eleven Thousand One Hundred and Thirty-Nine Crore Sixty-One Lakh Three Thousand Four Hundred and Twenty-Three), while its subsidiaries received notices for Rs 32,89,94,41,744 and Rs 17,65,21,80,638, respectively. These amounts are calculated based on the gross bet value of games played, further intensifying the financial strain on the company and its affiliates.
The tax dispute stems from the GST Council’s decision to impose a 28 percent tax on the full face value of chips used for gaming, rather than taxing only net house winnings. This change has had a significant impact on the gaming industry, with many companies grappling with the increased tax burden.
Delta Corp had previously put its plans to take its online gaming unit public on hold due to uncertainties surrounding the GST rate increase on the sector. The company recently reported a 1.6 percent year-on-year increase in consolidated net profit for the quarter ending in September, with a marginal rise in revenue.
The tax notices issued to Delta Corp and other gaming companies have raised concerns in the industry, with demands totaling a staggering Rs 55,000 crore. Critics have labeled this as a form of retrospective taxation, as some of the demands date back to periods before the implementation of the new tax treatment for gaming platforms on October 1, 2023. However, the central government maintains that these show cause notices follow a clarification of the law rather than a retrospective change, and the demand for dues is not of a retrospective nature.
The developments in the Delta Corp case will be closely watched by the gaming industry and financial markets as the legal proceedings progress, potentially setting a precedent for how such tax disputes are resolved in the future.
Sources By Agencies