Delta Corp faces Rs 16,800 crore GST demand; company to challenge it in court

Delta Corp, India’s largest gaming and casino operator, has received tax notices totalling Rs 16,822 crore from the Directorate General of GST Intelligence (DGGI) on Friday. The company said it would pursue legal remedies to challenge the notices, which are based on gross bet value and not gross gaming value.

What are the tax notices about?

According to a regulatory filing by Delta Corp, one notice for Rs 11,140 crore has been raised against the company itself. The other notice for Rs 5,682 crore has been raised against three of its subsidiaries – Casino Deltin Denzong, Highstreet Cruises and Delta Pleasure Cruises. The notices pertain to the period between July 2017 and March 2022.

Delta Corp faces Rs 16,800 crore GST demand; company to challenge it in court
Delta Corp faces Rs 16,800 crore GST demand; company to challenge it in court

The DGGI has alleged that Delta Corp and its subsidiaries have evaded Goods and Services Tax (GST) by under-reporting their taxable value of services. The DGGI has calculated the tax liability based on the gross bet value, which is the total amount wagered by the customers, instead of the gross gaming value, which is the net revenue earned by the company after deducting the winnings paid to the customers.

Delta Corp said that the GST notices are “erroneous” and “without any basis in law or facts”. The company said that it has been paying GST on the gross gaming value, which is in accordance with the GST law and the rulings of various courts and tribunals. The company also said that it has been regularly filing its GST returns and paying its dues without any default or delay.

How will Delta Corp challenge the notices?

Delta Corp said that it would take all necessary steps to protect its interests and challenge the GST notices in accordance with law. The company said that it would file appropriate appeals before the competent authorities and seek judicial intervention if required.

The company also pointed out that such tax demands are not a company-specific problem, but an industry-wide phenomenon. It said that several other gaming and casino operators have also received similar GST notices from the DGGI and have challenged them in various forums.

Delta Corp said that it is confident of succeeding in its legal recourse and that the GST notices would not have any material impact on its financials or operations.

What is the impact of the GST notices on Delta Corp’s stock?

Delta Corp’s stock price fell by 0.03% or Rs 0.05 to close at Rs 175.25 on Friday, after the company disclosed the GST notices to the stock exchanges. The stock has lost 17.14% in one year and 18.62% since the beginning of this year.

The market capitalisation of Delta Corp stood at Rs 4,692.69 crore as of Friday’s closing. The stock has a one-year beta of 1.4, indicating very high volatility during the period.

In terms of technical indicators, the relative strength index (RSI) of Delta Corp stands at 34.3, signalling that it is trading neither in the oversold nor in the overbought zone. Delta Corp’s shares are trading lower than the 5-day, 10-day, 20-day, 50-day, 100-day and 200-day moving averages.

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