The Bombay High Court is demanding Goa’s tax department to explain why it had imposed a service tax on casino license fees, local media reports.
Earlier this year, the Goa indirect tax department distributed notices to Goa-based casinos, asking them to pay a service tax on the state license fees.
However, casino owners challenged the tax demands, arguing that there is no legal ground for this tax demand.
Abhishek A Rastogi, partner, Khaitan & Co, who filed a writ petition with the Goa bench of the Bombay High Court earlier this year argued that the license fees are a statutory levy, not fees for services rendered by the state government – meaning they should be outside the scope of service tax.
“Demanding tax on statutory license fees is absurd. It’s like demanding a tax on passport fees paid to the government. Based on a circular, the DRI has initiated an investigation for applicability of service tax,” said Rastogi.
Interestingly, a similar case was filed in the Delhi High Court by liquor companies challenging service tax/GST demand on license fees, with the court ruling that such license fees are outside the scope of goods and services tax levy.