The Directorate of Revenue Intelligence (DRI) has issued notices to 10 casinos in Goa for evading service tax. An investigation has also been initiated in the matter. The intelligence arm of the indirect tax department has issued notices asking these casinos to pay up taxes on license fee for three years from 2014-2016. The notices claim that the casinos will have to pay service tax on their license fee to be able to run their business. The DRI is demanding about 15% tax arguing that the services provided by casinos could be categorized as goods as they "reserve the right to enter" for customers. As mentioned in a report in The Economic Times, a couple of the casinos have already complied with the demands while others have taken the matter to court. They argue that the license fee they pay the government is equivalent to permission, making this tax demand questionable.
Abhishek A Rastogi, Partner at Khaitan & Co, who filed a writ petition with the Goa bench of the Bombay High Court said that this tax demand is absurd and likened it to a tax demanded on passport fee. He further added that there has to be an element of service and quid pro quo for an activity to be taxable.
There are around 10 casinos in Goa and they were payin up anything between Rs 4 crore to Rs 15 crore per annum as license fee until recently. Six out of the 10 are mostly located in five star hotels.
A Times of India report from March mentioned that the government hiked up the licensing fee by 4.5 times. The hike would add up Rs 150 crore to the annual revenue. As per the move, offshore casino vessels with capacity of 400 or more are required to pay up around Rs 40 crore from the earlier Rs 12 crore. For vessels with 200 to 400 passenger capacity, the licensing fee rose up to Rs 30 crore from Rs 11 crore, and for vessels with capacity upto 200, the fees was hiked to Rs 25 crore from Rs 10 crore. For onshore casinos, the transfer license fee was hiked to Rs 30 crore from Rs 10 crore, while for offshore casinos it hiked to Rs 50 crore from Rs 20 crore.
There was also a hike in the license application fee to Rs 50 lakh from Rs 20 lakh for both onshore and offshore casinos.
Currently there are casinos only in Goa, Daman and Sikkim.
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