Shares of the Indian casino operator Delta Corp witnessed a substantial decline on Monday, plummeting by as much as 20 percent to their lowest levels since January 2021. This sharp downturn resulted in Delta Corp's shares falling by 17.77 percent to Rs 144.15 on the BSE at around 11:18 a.m. Earlier in the trading session, the stock had reached a 52-week low of Rs 140.35 per share.
The precipitous drop in share value followed the company's announcement that it had received a notice demanding payment of approximately Rs 11,140 crore in tax arrears. In an official filing dated September 22, Delta Corp disclosed the nature of this notice, stating: "Please note that the Company has received an intimation for payment of shortfall tax under Section 74(5) of the CGST Act, 2017 and Goa SGST Act, 2017, from the Directorate General of GST Intelligence, Hyderabad ('DG Notice'), earlier today."
The DG Notice instructed the company to remit an alleged tax liability of INR 1,11,39,61,03,423 (Rupees Eleven Thousand One Hundred and Thirty-Nine Crore Sixty One Lakh Three Thousand Four Hundred and Twenty-Three), inclusive of interest and penalties, for the period spanning from July 2017 to March 2022. Failure to comply with this directive would result in the issuance of a show cause notice to the company under Section 74(1) of the CGST Act, 2017 and Goa SGST Act, 2017.
In response to this development, Delta Corp emphasized that it had received legal counsel asserting the arbitrary and legally unfounded nature of the DG Notice and the associated tax demand. The company stated its intention to exhaust all available legal avenues to challenge this tax demand and any related proceedings.
Furthermore, Delta Corp disclosed that it, along with two of its subsidiaries, had received intimation of an additional tax shortfall amounting to Rs 5,683 crore for the period between July 2017 and March 2022.
This latest turn of events represents a significant setback for Delta Corp, which was already contending with heightened government levies. The stock experienced its most substantial intraday percentage decline since July 12 when the Goods and Services Tax (GST) Council of India imposed a 28 percent indirect tax on revenues generated by gaming companies. Notably, Delta Corp's stock has declined by over 33 percent since the beginning of the year and nearly 20 percent in the past month.
This decline in Delta Corp's shares stands in contrast to the performance of its peers, such as Nazara Technologies and Onmobile Gaming, which have seen their stock prices rise by approximately 18 percent and 46 percent, respectively, over the same period.
It is worth noting that global investors have urged Indian Prime Minister Narendra Modi to reconsider the 28 percent gaming tax, contending that it poses a hindrance to potential investments amounting to approximately $4 billion. However, the country's revenue secretary has maintained that there is no need to revise the tax policy.
