India’s tax agency has placed 10 of the biggest casinos in the state of Goa under investigation over allegations that they have been evading service taxes, according to The Economic Times of India report.
Tax officers from India’s Directorate of Revenue Intelligence (DRI) recently came knocking on the doors of the supposedly erring casinos to serve their respective tax notices. The government is demanding these casinos pay service taxes on their license fees.
The DRI accused the casinos of failing to pay tax on license fees from 2014 to 2016, claiming that the law clearly stated that the casinos were required to remit 15 percent tax on the fees.
Goa hosts at least six land-based casinos while the remaining are floating casinos. The brick-and-mortar casinos are situated in five-star hotels, where only visitors from other states are welcomed.
So far, one or two casino operators have already given in to the DRI’s demand but the others have lodged petitions with the Goa bench of the Bombay High Court challenging the tax demand.
Attorney Abhishek A. Rastogi filed a writ petition arguing that the license itself was already a permit for the casinos to operate and thus there was no legal ground for the tax demand.
“Demanding tax on statutory license fees is absurd. It’s like demanding tax on passport fees paid to the government. Based on a circular, the DRI has initiated investigation for applicability of service tax,” Rastogi said, according to the news outlet. “There needs to be an element of service and quid pro quo for an activity to be taxable.”
Meanwhile, tax experts have sided with the casinos, pointing out that it wasn’t the first time that the government has made such demands. According to Deloitte India partner M.S. Mani, casino operators shouldn’t be required to pay other indirect taxes since they were already burdened with service tax on a reverse charge basis.
