Delta Corp Subsidiary Hit With Rs 6,384 Cr GST Shortfall Tax Notice

Delta Corp, a leading casino chain in India, has faced yet another financial blow as its subsidiary, Deltatech Gaming, which operates popular gaming apps Adda52 and Addagames, has been slapped with a hefty Goods and Services Tax (GST) shortfall tax notice. The colossal sum of Rs 6,384 crores has taken the business world by storm, adding to Delta Corp's ongoing tax woes.

The subsidiary, previously known as Gaussian Networks, was recently informed about the substantial tax bill, prompting concern among shareholders and stakeholders. In a statement to the stock exchanges, Delta Corp disclosed that Deltatech Gaming has been advised to settle the alleged tax shortfall, complete with interest and penalties. Failure to do so may result in a show cause notice under Section 74(1) of the CGST Act, 2017.

This latest development has skyrocketed Delta Corp's cumulative tax shortfall liability to an astonishing Rs 23,206 crore, a staggering figure when compared to the company's market capitalization of just Rs 3,749 crores.

The tax notice comes on the heels of a similar hit the company took in late September when it received a direct tax notice of Rs 11,140 crores. To compound the issue, three of Delta Corp's subsidiaries, including Casino Deltin Denzong, Highstreet Cruises, and Delta Pleasure Cruises, were also served notices totaling Rs 5,682 crores. These notices are rooted in the calculation of tax on the gross bet value of games played, rather than the gross rake amount, which has become a bone of contention within the gaming industry.

Delta Corp voiced its concerns over this taxing methodology, emphasizing that it has been a contentious issue in the industry for some time. The company further noted that it had made multiple representations to the government at an industry-wide level to address the issue.

The casino and online gaming sector has been grappling with the GST Council's decision to impose a 28 percent tax on the full face value of chips used for playing. This means that players effectively receive only Rs 72 to bet for every Rs 100 worth of chips purchased, marking a significant shift from the previous GST model, which taxed only the net house winnings.

Delta Corp, with its renowned gaming offerings, now faces a tumultuous journey as it navigates the complexities of the tax landscape, in hopes of finding a resolution to its soaring GST liabilities. Investors and industry observers remain on high alert, eager to see how the company responds to this latest financial challenge.

The company and its three subsidiaries received tax notices of a total amount of Rs 16,822 crores from the Directorate General of GST Intelligence for a period between July 2017 and March 2022. The stock slumped as much as 18% to hit a 33-month low soon after the notice.