After recent issues concerning licensing fee hikes in the Indian state of Goa, another financial burdening obstacle pokes its ugly head. According to local reports, ten of Goa’s biggest casinos are under investigation by India’s Tax Agency known as the Directorate of Revenue Intelligence (DRI) for evading three years of service taxes on their licensing fees. Allegations were made against these casinos for not paying between the years of 2014 and 2016 and each casino in question was given notices upon behalf of the Goa government through DRI. These notices provide the official demand for payment and instruct the casinos on how to do this. Two casino venue operators went ahead and paid their past dues.
However, other casinos operating within Goa are challenging the demand for service taxes and have taken a petition to the Goa bench of the Bombay High Courts. This action could lead to a possible win for casinos as the law states that casinos are not required to remit 15 % tax on the fees. Not only that, numerous tax experts side with the casinos stating that the license provides the permission granted to operate within the state and that these casinos who have paid that fee should not be required or expected to pay any other indirect taxes after that. The win could be secured for casinos due to issues pertaining to the local government peddling for more revenue, even after increasing licensing fees. For Goa’s government to ask for raised fees and a tax upon such licensing spews nothing but greed.
To further point out the absurdity in this action, Goa’s government has never asked for this tax in the past which leads us to believe that this is a last-minute demand by the government which fuels our suspicion of greed. Only Sikkim, Goa, and Union Territory Daman can license and permit the operation of casinos. Possibly with the growing competition from other states who license, Goa is trying to squeeze all the revenue it can out of casinos located in its state.
According to a TOI report during the beginning quarter of 2018, it was stated that the license fee for casinos increased fourfold. As we explained in our pay or face shut down blog, casinos pay out a licensing fee whose payment amount is determined by the capacity size of the casino, the previous fee ranged from Rs 4 crore to Rs 15 crore whereas now casinos could be required to pay between Rs 25 crore and Rs 50 crore. With that in mind, tax experts have speculated that the licensing increase would also increase the service tax demanded, providing more revenue to those in charge of Goa.
However, casinos in Goa had already struggled to meet the licensing fee increase and adding another fee in the form of a service tax they will have to pay will more than likely put and keep certain casinos out of business. Goa has 6 land-based casinos while at least four the others float upon water. The outcome of this challenge will be settled once the Bombay High Courts rule on a decision.