The share price of Indian gaming operator Delta Corp fell by almost 20% on Monday after the company revealed a notice of tax liabilities from the government.
In a Friday filing, Delta Corp said it had received from the Directorate General of GST Intelligence in Hyderabad an intimation for payment of a shortfall in tax amounting to 11,400 crore (US$1.34 billion) – roughly three times its total market cap. The shortfall, according to the notice, relates to the period from July 2017 to March 2022, with the Directorate General to issue a show cause notice if not paid promptly.
In its filing, Delta Corp observed that the claim is “based on the gross bet value of all games played at the casinos during the relevant period,” not dissimilar to recent moves by India’s GST Council to slap a 28% tax on gaming deposits for operators nationwide.
“Demand of GST on gross bet value, rather than gross gaming revenue, has been an industry issue and various representations have already been made to the Government at an industry level in relation to this issue,” Delta Corp added.
“The Company has been legally advised that the DG Notice and the tax demand is arbitrary and contrary to law, and the Company will pursue all legal remedies available to it to challenge such tax demand and related proceedings.”
Delta Corp shares fell by 18.59% on Monday to INR 142.80 (US$1.72).
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