Friday, August 14, 2020
Home News Updates Duty Liability of Casino Vessels

Duty Liability of Casino Vessels

By Fathima Nihala -

A Casino Vessel is a seagoing vessel of any kind on which gambling takes place. Historically, international waters began just three miles from land in many countries. Gambling ships, like offshore radio stations, would be anchored usually just outside the three-mile limit.

There are many casinos in India including Online Casino like NetBet Casino of which about six are land-based and the rest are floating casinos and their license fees ranged anywhere between Rs. 4 crore and Rs. 15 crores per annum. Most of the onshore casinos are located in five-star hotels in Goa where only visitors from other states are allowed to enter.

On a report, it was said that the license fee for casinos has been increased by nearly four times in 2018. Casinos would be required to pay anywhere between Rs. 25 crore and Rs. 50 crore as license fees annually.

It is a known secret that gambling is very popular in India. In addition to casino games, mostly card games, gamblers in India have a great affair with betting. Even though, most games of chance are banned, although some states allow certain forms of gambling.

Both the state of Goa and Sikkim are known for their liberal gambling laws in India and players can visit multiple casinos. Indian residents with a weak spot for gambling can also start on several gambling boats that sail over the Mandovi river (Panjim). Additionally, legal lottery tickets are available in several states across the country, while betting on horse races is the only legalized form of sports betting in India.

Is the casino vessel liable to pay customs duty?

The Casino owners have challenged the tax demands and taken the matter to court arguing license fees they pay to the government is equivalent to permission and that there is no legal ground for this tax demand.

Demanding tax on statutory license fees is absurd. It’s like demanding tax on passport fees paid to the government. Based on a circular, the DRI has initiated investigation for applicability of service tax,” said Abhishek A Rastogi, partner, Khaitan & Co, who filed a writ petition in this regard with the Goa bench of the Bombay High Court.

On a dispute in the classification of ‘MV Royale Floatal’, a vessel manufactured by M/s Vijai Marine Services in which Department was aggrieved by order-in-original dated 31st March 2016 of Commissioner of Central Excise & Service Tax, Goa and sought re-classification of the goods under heading no. 8903 9990, instead of heading no. 8901 9000 accepted by the adjudicating authority, of the First Schedule to Central Excise Tariff Act, 1985.

It was concluded by the authority, that floating casino were not ‘vessels for pleasure or sports’. It was alleged that the ‘dumb barge’, converted as a ‘self-propelled floating hotel’ as per the contract with M/s Highstreet Cruises and Entertainment Pvt Ltd was, thereafter, handed over to M/s Delta Pleasure Cruise Company Pvt Ltd on ‘bareboat charter’ and that the latter was a known operator of floating casinos, including MV Casino Royale, at the same location in Goa.

The clearance, at a declared value of ₹ 11.89 crores, had been effected at ‘nil’ rate of duty applicable to heading no. 8905 with an exemption under the notification. In this instance, the assessee had sought classification under heading 8905 of the First Schedule to the Central Excise Tarif Act, 1985.

The ‘Casino vessels’ could not be classified as ‘pleasure boats’ as the vessel was a supply vessel used for transport of persons and goods, the correct classification would be heading no. 8901 90 00 which covers’ Other vessels for the transport of the goods and other vessels for the transport of both persons and goods’ and not under heading No. 8903 9990. More so, the goods falling under heading no. 8901 were exempted.

The Casino Vessels classifiable as ‘Passenger Ship’ under heading 8901 9000 and not ‘Pleasure Boats’