Goa tax authorities demand service tax on license fee

The intelligence arm of Goa’s tax department has served notices to ten casinos in Goa, demanding they pay a service tax on their license fees, local media reports.

The Directorate of Revenue Intelligence,  which issued the tax notice, claims that the casinos are required to pay a service tax on their license fees for three years from 2014 to 2016.

Some casino owners have challenged the tax demands and have taken the matter to court, arguing that there is no legal ground for this tax demand. The tax notices are demanding a 15 percent tax applicable on license fees.

“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 Abhishek A Rastogi, partner, Khaitan & Co, who filed a writ petition with the Goa bench of the Bombay High Court.

According to a report from the Economic Times of India, tax experts said that no such tax demand has ever been made.

It is understood that one or two casinos have already paid the service tax, while others are looking to challenge the demand.

Goa’s license fees hiked four-fold earlier this year, with casinos now required to pay between Rs. 25 crore (US$3.7 million) and Rs. 50 crore annually.