Delta Corp calls ₹33,500 cr retrospective GST demand as ‘confiscatory’ in SC
Division bench of the Supreme Court comprising Justices JB Pardiwala and R. Mahadevan on Thursday reiterated that July 25 will be the final day of hearing after which the judgement will be reserved for pronouncement.
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In a detailed set of submissions filed before the Supreme Court, Senior Advocate Dr. Abhishek Manu Singhvi, representing Delta Corp Limited and its subsidiaries, submitted a strong constitutional and procedural challenge to the Centre’s retrospective ₹33,500 crore Goods and Services Tax (GST) demand on casino operations.
Division bench of the Supreme Court comprising Justices JB Pardiwala and R. Mahadevan on Thursday reiterated that July 25 will be the final day of hearing after which the judgement will be reserved for pronouncement.
The demand, stemming from show cause notices issued for the period between July 1, 2017, and March 31, 2022, is based on the contentious valuation of gross bet value (GBV) instead of the globally accepted gross gaming revenue (GGR). The dispute, part of a cluster of transferred petitions raises fundamental questions about legislative competence, the nature of supply in casino gaming, and the interpretation of GST rules under the Constitution.
Casinos Operated Under Valid Licenses
Delta Corp, India’s largest publicly listed casino operator, runs licensed casinos in Goa (onshore and offshore) and Sikkim. These operations are governed by local statutes—the Goa Daman and Diu Public Gambling Act, 1976, and the Sikkim Casinos (Control and Tax) Act, 2002. Over the disputed five-year period, Delta and its subsidiaries paid ₹422 crore in state license fees, ₹262 crore in income tax, and ₹542.59 crore in GST on their gross gaming revenue.
Dr. Singhvi argued that the company is a bona fide taxpayer, and that the staggering retrospective demand—amounting to ₹16,822.97 crore excluding interest and penalties, which push the figure beyond ₹33,500 crore—is not only absurd and confiscatory but also violates constitutional guarantees under Articles 14 and 19(1)(g).
GGR vs GBV: The Heart of the Dispute
The government has invoked Rule 31A of the CGST Rules, arguing that GST should apply to the total bet amount placed by players—termed gross bet value (GBV). In contrast, Delta contends that GST should be levied only on its actual earnings, i.e., the gross gaming revenue (GGR), calculated as the total chips purchased minus the chips returned to players.
Through detailed illustrative examples, Singhvi’s submissions show how taxing GBV leads to a situation where the tax liability can be several times the actual revenue. One scenario revealed that while a casino earned ₹10,000 in GGR, it could be asked to pay ₹61,600 in GST if GBV is used, creating a disproportionate burden.
“The GST calculated on GBV is over 6 times the consideration received by the casino and over 22 times the GST actually payable on GGR,” the submission states, calling the methodology "artificial, arbitrary, confiscatory, and unworkable.”
Legal and Constitutional Arguments
The core legal challenge revolves around the legislative competence to tax gambling activities. Delta asserts that Article 246A does not empower the Centre to legislate on gambling or betting, especially after the deletion of Entry 62 of List II. The Centre can only derive such powers under Entry 97 of List I via new legislation. Additionally, Delta argues there is no “supply” or “transfer of actionable claim” in casino gaming as defined under the CGST Act and related statutes, rendering Rule 31A(3) inapplicable.
Delta further points out that a new rule—Rule 31C—was specifically introduced in October 2023 to address valuation in casinos. The prior application of Rule 31A, which was silent on casinos and focused on race clubs, is therefore ultra vires and invalid for the 2017–22 period.
Financial Impact on the Casino Industry
The financial disclosures made by Delta Corp highlight the staggering mismatch between actual revenues and tax demands. Between 2017 and 2022, Delta Corp Limited’s Goa operations reported a GGR of ₹1,640.40 crore and paid ₹358.39 crore in GST. However, the GST demand raised against it is ₹11,139.61 crore—nearly seven times its GGR—excluding additional interest and penalties, which take the total beyond ₹22,250 crore.
Delta’s Sikkim operations generated a GGR of ₹77.30 crore, on which ₹18.14 crore in GST was paid. Yet, the company now faces a demand of ₹628.20 crore, which may exceed ₹1,250 crore after interest and penalties.
Its subsidiary, Delta Pleasure Cruise Company Private Limited (Goa), posted ₹220.25 crore in GGR and paid ₹53.97 crore in GST. It has now been issued a demand notice of ₹1,765.22 crore, which could balloon to over ₹3,500 crore.
Another subsidiary, Highstreet Cruises and Entertainment Private Limited (Goa), reported a GGR of ₹542.99 crore and paid ₹112.09 crore in GST. However, it is now being asked to pay ₹3,289.94 crore, with the total potentially crossing ₹6,500 crore after penalties.
Combined across all entities, the group had a total GGR of ₹2,480.94 crore, on which it paid ₹542.59 crore in GST. Yet, it now faces a combined GST demand of ₹16,822.97 crore, which with interest and penalty exceeds ₹33,500 crore. This demand is over 13 times the group’s total GGR for the period in question.
Dr. Singhvi’s submissions conclude that the SCNs threaten to destroy the legitimate casino industry, which operates under express government licenses. The retrospective demand, the petition argues, is not only economically ruinous but also legally unsustainable and violative of settled constitutional principles, including certainty in taxation and fair play under Article 14.
In a parallel argument, Senior Advocate Balbir Singh, representing real money gaming operator, urged the court to distinguish between “betting,” “gambling,” and “games of skill.” He argued that online money gaming was treated as an OIDAR service under the IGST Act until 2023 amendments reclassified it as a taxable actionable claim.
Singh claimed that such retrospective demands are “untenable,” particularly for an industry that has been regularly paying taxes under the previously defined regime.
The Supreme Court is set to resume hearing the matter on July 18, 2025, with Dr. Singhvi to continue his submissions.
