LI Network
Published on: January 11, 2024 at 11:00 IST
Delta Corp, an online gaming company, disputed the Goods and Services Tax (GST) demand exceeding Rs 23,200 crore, labeling it arbitrary and inconsistent with legal provisions.
The firm, also involved in casino operations, reported a 59% year-on-year decline in consolidated net profit for the quarter ending December 2023, amounting to Rs 34.48 crore.
The income from operations was Rs 181.54 crore, reflecting an 18% decrease from the same period in the previous year.
In a footnote accompanying its Q3FY24 figures, Delta Corp disclosed that on September 27, 2023, the holding company and two subsidiaries received show cause notices from the Directorate General of GST Intelligence (DGGI), Hyderabad.
These notices alleged a shortfall in payment of Goods and Services Tax (GST), totaling Rs 16,822.9 crore for the period from July 1, 2017, to March 31, 2022. On October 28, 2023, another subsidiary received a GST show cause notice amounting to Rs 6,384.32 crore for the period from July 1, 2017, to November 30, 2022, from DGGI, Kolkata.
Delta Corp highlighted that the authorities’ demands based on gross bet value/gross face value, instead of gross gaming revenue/gross rake amount, have been an industry concern.
The company and its subsidiaries have filed writ petitions and obtained stay orders from respective High Courts. Delta Corp emphasized that, based on legal assessments, it believes the notices and tax demands are arbitrary and contrary to the law.
The company intends to explore all legal remedies available to challenge these tax demands and the associated proceedings. Given the strong defense against the show cause notices, the group management believes that, until the GST matter concludes effectively, there is no need to make provisions for impairment towards Goodwill and other assets related to the three subsidiaries, as reflected in the consolidated financial results.