The share price of e-gaming company Delta Corp tanked as much as 20%, hitting its 52-week low of Rs 140.35 during the early trade on Monday. The move came following the company receiving a GST tax notice amounting to over Rs 16,822 crore from the government authorities. According to the information available on the NSE, “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”), on Friday.
Ironically the Market capitalization of Delta Corp stands at Rs 3,878. 66 crore. The company reported to the NSE that, the DG Notice advises the Company to pay an alleged tax liability of Rs 1,11,39,61,03,423 along with interest and penalty for the period from July 2017 to March 2022 , failing which a show cause notice will be issued to the Company under Section 74(1) of the CGST Act, 2017 and Goa SGST Act, 2017.
“Surprised to see Rs 16,800 crore tax notice to casino operator Delta Corp for the period between July 2017 and March 2022. Delta Corp has been in the news after the government levied 28% GST on gross bet value for casinos three months ago and in last month the chief financial officer also resigned which is keeping pressure on share prices since then. Such a surprised tax department claim is a big negative with immediate impact which is more than 4x to its today’s market cap (Rs3,873 Cr). Casino operating or online gaming businesses have turned out to be the riskiest business in today’s environment. Hence, we continue to recommend investors to avoid such high-risk business and we should also wait and watch for Delta Corp’s action to respond against the demand,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.
The GST Council on August 2 decided that 28% tax shall apply on the full face value of bets, without any distinction between games of skill or chance. While the decision is to take effect from October 1, a dispute is ongoing between the online gaming industry and the revenue department over how the GST was to be applicable to the sector prior to the date when this decision will be implemented.
The stock price of Delta Corp has been witnessing a rapid correction over the past one year. The price fell 19.8% in the last one week, 20.1% in the last one month, and 25.1% in the six months while it tanked as much as 31.5% in the last one year. The stock price hit its all-time high of Rs 259.95 on June 18, 2023, while it touched its all-time low today.