The recent GST council meeting brought bad news for Goa’s casino industry. The players, who were reeling from having to deal with a ban on online real money gaming apps, now also have to contend with the fact that casino gaming has been brought under the new 40% slab and has been categorised as a ‘sin good' alongside tobacco products, private jets, yachts for personal use and high-capacity cars and motorcycles.
Taken together with the GST council’s decision to calculate GST based on the face value of transactions rather than on gross gaming revenue -- a decision which the casinos have challenged in court, it means that the casino industry honchos are now saying that the rate will kill the industry entirely. What one needs to keep in mind is that the casino industry in the state is yet to pay its dues. Every time the industry has been faced with a tax notice, the notice has been challenged in Court.
In July last year, when the casinos operating in the state were collectively slapped with a notice to pay Rs 26,000 crore, including interest, the matter was challenged, first in the High Court and later in the Supreme Court. Similarly, when the Goa government asked the casinos to pay the annual recurring fees for the Covid period, amounting to Rs 321 crore, the matter was challenged before the High Court and when the High Court upheld the Goa government's decision, that was challenged in the Supreme Court.
The cat-and-mouse game between the Goa government and the casinos over paying fees and taxes is nothing new. In fact, one can argue that the casino industry in Goa has continued to prosper despite the various tax notices they have received.
Interestingly, if there’s one area where the Goa government and the central government have diverged on policy, it is on the issue of taxing the casinos. The Goa government, via its representative to the GST council, Mauvin Godinho, had vehemently made a case that casino GST collections should be collected based on gross gaming revenue (GGR) rather than on the face value of transactions (every time someone buys chips). It was an issue that failed to get the council's endorsement.
With that in mind, we can safely assume that there will be many in the Goa government who are perplexed at Deltin’s decision to keep its Dhargal township project on hold -- despite already receiving the approvals. The Goa government has bent over backwards to try to accommodate the project and even took a cabinet decision that the land be denotified as a command area of the Tillari project. The GST has rightly considered gambling as a ‘sin’ and placed a ‘sin tax' of 40%. Casinos are operational only in Goa and Sikkim, and while that might serve as a deterrent for those from other states to gamble, that is no solace to locals, who are banned from entering, in theory, but bans can be bypassed.
The Goa government must not succumb to the pressure tactics of the casino industry, and needs to keep in mind the dual purpose of a sin tax to serve as a deterrent towards what is considered a harmful vice, as well as to generate revenue from those who wish to do it anyway.
