The Bombay High Court at Goa held that the assessee cannot take advantage of the failure of the state government to insist upon a timely deposit of Annual Recurring Fees (A.R.F.).
The Petitioners have been issued licenses to operate offshore and onshore casinos in the State of Goa under the provisions of the Goa Public Gambling Act, 1976. These licenses are subject to several terms and conditions, including the payment of ARF prescribed in the statutory notification issued under the Gambling Act.
As a part of safety in Covid’19 Pandemic lockdown for periods between 01.04.2020 and 31.10.2020 and 01.05.2021 and 30.09.2021 (closure periods) affected the Petitioners’ casino operations. By way of concession, the State Government deferred the issue of payments during periods affected by partial or even complete closure of casino operations by not insisting upon immediate payments.
The State directed the Petitioners to pay the arrears of A.R.F. for the closure periods along with penal interest at the rate of 12% per annum. The Petitioners, on various grounds, contended that the State should not be permitted to insist upon recovery of arrears towards A.R.F.
It was contended by the petitioner that the Government, as a contracting party prohibited casino operations during the closure period. Therefore, the Government’s insistence that the petitioners pay A.R.F. during this period was palpably arbitrary, unreasonable and unfair, thereby infringing Article 14 of the Constitution.
On the other hand, the Government’s contended that the petitioners attempted to obtain undue advantage from the unfortunate circumstance in which the State Government had to issue lockdown or closure directives.
It was viewed that if the State were not to insist upon recovery of the amount, the burden would pass on to the honest taxpayers, who would have to pay more or those in need, who would receive proportionately less welfare and development. It was unreasonable to expect that such extra commercial activities should be directly or indirectly subsidized by the taxpayers or waiver of Rs.321 crores (Rupees Three Hundred & Twenty-One Crores) be granted in such tragic circumstances to casino operators.
The State Government did not insist upon the petitioners paying A.R.F. in terms of the statutory schedule. The State Government has extended concessions to the petitioners by deferring the payments.
The Two Judge Bench comprising Justice Valmiki Sa Menezes and Justice M S Sonak observed that the State Government’s denial of waiver or exemptions cannot be held as a palpably arbitrary, unreasonable or unfair exercise of power. Further held that the State Government has not breached the equality mandate under Article 14 of the Constitution and the Petitioners cannot wriggle out of their obligations.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
