Bombay High Court orders Goa to clarify casino service fees

Nearly six months after the Directorate of Revenue Intelligence issued 10 notices to Goa’s casinos ordering them to pay tax on licence fees for the years 2014 to 2016, the Bombay High Court has ordered Goa’s tax department to justify why the service fees were introduced.

The Goa bench of the Bombay High Court made the demand while hearing a writ petition filed by several casinos challenging federal taxes on state licence fees.

The operators contend that the licence fees are a statutory levy, rather than fees for services rendered by the state government. Based on this, they argue that such fees should be outside the scope of service tax.

“The issue is expected to be pragmatically resolved by the [Goods and Services Tax] Council, as has been the past experience,” said Abhishek A Rastogi, partner at Khaitan and Co, who is arguing for the petitioners.
“The repercussions of the unresolved issue are very serious and huge impact could be on other activities.”

Meanwhile, back in August, Goa’s chief minister Manohar Parrikar announced that a new gaming commissioner would be appointed to regulate and oversee casino activities in the state by 2019, along with plans to shift the six offshore casinos on the Mandovi river to a designated gaming zone within four years.

However, Parrikar was taken ill on 15 September, with legislators looking to find a solution the vacuum created by the chief minister’s absence, plans for regulatory reform could temporarily be put on the political backburner.