Online gaming company Delta Corp stated that it has not made any provisions for the GST demand, which is valued at over Rs 23,200 crore, because it is arbitrary and violates legal provisions. The company, which also runs casinos, revealed that its consolidated net profit for the quarter that ended in December 2023 at Rs 34.48 crore decreased by 59% year over year. At Rs 181.54 crore, the operating income was 18% less than it was a year earlier.
The holding company and its two subsidiary companies received show cause notices from the Directorate General of GST Intelligence (DGGI), Hyderabad, on September 27, 2023, for allegedly failing to pay Goods and Services Tax (GST) totaling Rs 16,822.9 crore for the period of July 1, 2017, to March 31, 2022, according to a footnote included with Delta Corp’s Q3FY24 financial results. A GST show cause notice totaling Rs 6,384.32 crore for the period July 1, 2017, to November 30, 2022 was sent to another subsidiary of the company by DGGI, Kolkata, on October 28, 2023.
Read also: GST Council may consider raising GST registration limit from Rs 40 lakh to Rs 60 lakh
According to Delta Corp, industry participants have repeatedly made representations to the government regarding the demands made by the authorities regarding the gross bet value/gross face value as opposed to gross gaming revenue/gross take amount.
“Holding company/ subsidiary companies have filed writ petitions and have obtained stay orders from respective High Courts. Without prejudice, the holding company and its three subsidiaries, based on legal assessment, are of the view that all the above notices and the tax demands are arbitrary in nature and contrary to the provisions of law,” Delta Corp said in a regulatory filing.
It stated that the companies will use every legal tool at their disposal to contest these tax demands and the associated legal actions.
Read also: Valuation rules for GST on e-gaming platforms effective prospectively
The group management believes that until the GST matter is effectively resolved, “no provision for impairment is currently required towards Goodwill and other assets related to the three subsidiaries, as reflected in the consolidated financial results,” adding that the holding and subsidiary companies have a strong defence against the aforementioned show cause notices.
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