Delta corporation wins interim relief in GST case

On October 24, 2023, the Bombay High Court granted interim relief to Delta Corp Ltd, India’s largest casino operator, in a case related to a Goods and Services Tax (GST) notice put out by the Directorate General of GST Intelligence (DGGI). The DGGI had released a notice to Delta Corp demanding payment of GST shortfall to the tune of Rs 16,195 crore for the period between July 2017 and March 2022.

Delta Corp had challenged the GST notice on the grounds that the DGGI had erred in its interpretation of the GST law and that the company had paid all applicable taxes. The Bombay High Court has now directed the DGGI not to pass any final orders on the GST notice without its prior permission.

The interim relief granted by the Bombay High Court is a positive development for Delta Corp, as it provides the company with some breathing space to defend itself against the GST notice. The company has said that it is confident of its legal position and that it will continue to cooperate with the DGGI.

Since the GST Council approved a 28% uniform tax on online gaming, casinos, and horse racing, the share price of Delta Corp has been subject to intense selling pressure. The tax notice made matters worse and severely harmed feelings. On October 16, 2023, Delta Corp shares fell 52% from their 52-week high of 259.95 reached on June 28, 2023, to a 52-week low of 124.60.

The DG GST sent Delta Corp and its subsidiaries a letter requesting more than $23,000 crore in tax payments for the time frame of July 2017 to March 2022 within the past month. The amount of the tax notice is greater than six times the current market cap of Rs 3,600 crore.

The Directorate General of GST Intelligence has published a notice for the payment of lack tax last month, valued at 16,822 crores. This includes notices for a total of $5,682 crore against three of its companies, Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruise Company, as well as an alleged tax due of Rs. 11,139 crores, with interest and penalties, for the period from July 2017 to March 2022.

Furthermore, the casino operator received another notice from the DG GST this month regarding 6,384 crores. DeltaCorp said in a statement to the exchanges that it had received a notification under Section 74(5) of the CGST Act, 2017 and the West Bengal GST Act, 2017 from the Directorate General of GST Intelligence, Kolkata, asking for payment of shortfall tax. A regulatory filing states that there is a purported tax shortfall of 147,51,05,772 for the period of July 2017 through October 2022 and 6,384.3 crore for the period of January 2018 through November 2022. 

Impact on delta corporation’s business:

The GST notice issued by the DGGI had cast a shadow on Delta corporations’ business, as investors were concerned about the potential financial impact of the case. However, the interim relief granted by the Bombay high court has removed some of this uncertainty. In response to the announcement, delta corporation shares increased 8.2% to 140.7 in the first two hours of trading. The stock’s opening price of 136.05 was a 4.6% increase over its previous closing price of 130. With a market capitalization of $3,590 billion at the time of reporting, the stock was trading 3.15% higher at $134.1 per share.

The company’s share price has rallied since the interim relief was granted, reflecting the positive sentiment among investors. Delta Corp’s business is also expected to benefit from the gradual reopening of the economy, as people are returning to casinos and other entertainment venues.