License fee paid to Goa Govt for Casino Business is Consideration, No FTS: Bombay HC at Goa [Read Order]

The Bombay High Court at Goa in its recent judgement has held that the license fee paid to the Goa state government for allowing permission of casino amount to price or consideration of Contract and no Fee for Technical Service (FTS).

The question was to determine the legal relationship between the Government and the Petitioners under which they are permitted to operate casinos in the State of Goa.

The legal status of the Government by itself or through private players engaging in liquor or gambling activity was settled by several Constitution Bench decisions of the Supreme Court. It was accepted that no person or citizen has any fundamental right to engage in such activities because they are extra commercial. The Government can determine the manner, mode and extent of regulation at its discretion. These are legislative and executive will and policy matters, where the judicial review would be minimal.

It was evident that the Governmenthas only parted with its exclusive privilege to the petitioners to deal in gambling activities for "consideration". That such consideration is styled as a nonrecurring or recurring fee is not determinative of its true character.

The Constitution Bench first rejected the plea and held that the petitioners were successful bidders at the liquor vending auction. The terms and conditions regarding the license fees were clearand the bidders accepted such terms and conditions with open eyes. The Court held that those who contract with open eyes must accept the contract's burden and its benefits.

It was observed that the amount charged to the licensees is not a fee properly so-called nor indeed a tax but is like the price of a privilege, which the purchaser has to pay in any trading or business transactions.

The Court held that the amount payable by the licensees based on the bids offered by them in auctions and based on "fixed and assessed fees" is neither a fee in the technical sense nor a tax but is like the price of a privilege. It was held that there is no question of the Financial Commissioner lacking the power to organize auctions to authorize the recovery of any amount which is not a fee properly so-called.

The Two Judge Bench comprising Justice Valmiki Sa Menezes and Justice M S Sonak observed that the State Government has only parted with its exclusive privilege and permitted the petitioners to undertake casino operations, which are otherwise not even the legitimate objects of any trade, occupation or business. The license fee so-called is the price or the consideration for parting with such privilege, which is exclusively owned and controlled by the State Government.

Further held that “even though Section 13A of the said Act or the notifications issued thereunder refer to such charges as "fees", "non-recurring fees", or "recurring fees", it is not the terminology that is decisive. Very clearly, these amounts are nothing but consideration for the Government parting with its exclusive privilege to deal in gambling, which is otherwise prohibited under the said Act.”

To Read the full text of the Order CLICK HERE
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