Ten of the biggest casinos in Goa have been placed under investigation by India’s tax agency under claims that they have been evading service taxes.

In India casinos are required to pay licence fees to the government in order to stay in business.

The Directorate of Revenue Intelligence (DRI) served tax notices to the casinos which stated they were required to pay licence fees from the years 2014 through 2016. It also claims that the law states that casinos are required to pay a 15% tax on the fees.

While one or two casinos have given in to the demand, a few casino owners have taken the action to court with the argument that licence fees are already equivalent to a permit for the casinos to operate and therefore there is no legal ground for the tax demand.

An attorney who filed a writ petition with the Bombay High Court said: “Demanding tax on statutory licence 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.”

Tax experts have sided with the casinos saying that there has never been such a demand made before. M S Mani,Partner at Deloitte India added: “Many casinos have paid service tax on reverse charge basis and hence should not be expected to pay any other indirect tax. Further, since entertainment tax has been subsumed in GST, similar issues may not arise in future.”