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Delta Corp says Rs 23,200 crore-GST demand arbitrary

Jan 9, 2024

Delta Corp, an online gaming and casino firm, contested a GST demand of over Rs 23,200 crore, deeming it arbitrary and contrary to laws, hence not provisioning for it. Their Q3FY24 reported a 59% decrease in net profit at Rs 34.48 crore, with a reduced income from operations at Rs 181.54 crore. Show cause notices from tax authorities alleging GST short payments led to legal action by Delta Corp and its subsidiaries, securing stay orders from High Courts.

Online gaming firm Delta Corp on Tuesday said the GST demand worth over Rs 23,200 crore is arbitrary and contrary to provisions of law and hence it has not made any provisions towards the same. The company, which is also a casino operator, reported a 59 per cent year-on-year decline in its consolidated net profit for the quarter ended December 2023 at Rs 34.48 crore. The income from operations stood at Rs 181.54 crore, 18 per cent lower than the year-ago period.

In a footnote alongside its Q3FY24 numbers, Delta Corp said that on September 27, 2023, the holding company and its two subsidiary companies received show cause notices from the Directorate General of GST Intelligence (DGGI), Hyderabad, for alleged short payment of Goods and Services Tax (GST) aggregating to Rs 16,822.9 crore for the period July 1, 2017, to March 31, 2022. On October 28, 2023, another subsidiary of the company received a GST show cause notice aggregating to Rs 6,384.32 crore for the period July 1, 2017, to November 30, 2022, from DGGI, Kolkata.

Delta Corp said the demands made by the authorities on the gross bet value/ gross face value as against gross gaming revenue/gross rake amount has been an industry issue and multiple representations have been made by the industry participants to the government in this regard.

"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.

The companies will pursue all the legal remedies available to them to challenge such tax demands and the related proceedings, it informed.

Considering the fact that the holding and subsidiary companies have a good ground to defend against the said show cause notices, the group management believes that until the GST matter gets effectively concluded, "no provision for impairment is currently required towards Goodwill and other assets related to the three subsidiaries, as reflected in the consolidated financial results", it added.

[The Economic Times]

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