PANAJI
The Bombay High Court at Goa on Thursday rejected petitions filed by the companies operating casinos in Goa who had challenged orders of the government asking them to pay up the annual recurring fees including arrears for the years 2020 and 2021 amounting to Rs 321 crore during which time they were shut on account of the pandemic.
In its judgement, the High Court has said that there was nothing arbitrary or unreasonable in the State government’s decision to ask the companies to pay up, whilst pointing out that the fees being charged by the State was the price the State was charging for parting with its exclusive privilege to the petitioners to deal in gambling activities and was not comparable with any other licensor licensee relationship.
“It is apparent that the State Government, in this case, 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 licence fee so-called is the price or the consideration for parting with such privilege, which is exclusively owned and controlled by the State Government,” the High Court bench of Justices M S Sonak and Valmiki Menezes Sa, said.
The High Court also rejected the casino companies’ claims that there were no services being rendered by the state in exchange for the fees being charged.
“In the present cases, it would not be correct to hold that the State renders no regulatory or other services to the petitioners in particular and the casino operators in general. For example, most casino vessels are parked in the Mandovi River, accessible from spots that could be legitimately described as the heart of the Capital city's commerce.
“The pressures the very existence of such casino vessels in the Mandovi River exerts not only on the navigation but on parking, clearance of garbage, regulation to ensure that no sewage is discharged in the river, and policing because of the nightly hours through which such casino operates, cannot simply be wished away. Government staff are involved in regulation. Similar services are rendered by the State even to onshore casinos and the thousands of tourists that flock to such casinos,” the High Court said.
On the issue of whether there was palpable arbitrariness, unreasonableness and unfairness' by not exempting the casino companies from paying annual recurring fees during the closure periods and insisting upon compliance with the terms and conditions of the licence, the High Court ruled that “there was nothing arbitrary or unreasonable in imposing the lockdowns. There was also nothing arbitrary or unreasonable in denying exemptions or waivers.”
“In imposing lockdowns or closures of several operations, industries and activities (of which a casino is only one), the State Government, in our opinion, was not acting as a ‘contracting party’ or ‘licensor’ under some contract with the petitioners. These decisions were in the context of the State Government's duty and capacity as a welfare State. If the State Government were to have confused its role under the so-called contracts with the casino operators and its role as a welfare State, that would perhaps amount to an arbitrary exercise of power. The State's role under a contract cannot detract from or even influence the State's role as a welfare State,” the High Court also said.
Finally, the High Court, observed that the petitions were an “attempt is to draw an unprecedented gain of about Rs 321 crore by not paying the agreed consideration merely because this portion was deferred.”
“A writ Court exercising extraordinary and equitable jurisdiction cannot assist the petitioners' attempt and deprive the State of its legitimate revenue of almost Rs 321 crores for parting with its exclusive privilege. Moreover, any financial relief to the petitioners’ in such tragic circumstances would be at the cost of taxpayers, many of whom were also seriously affected by the national disaster. This figure is very high for a small State like Goa, which is reeling under severe fiscal debt,” the High court said.
“If the State were not to insist upon recovery of this 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. Indeed, it is unreasonable to expect that such extra commercium activities should be directly or indirectly subsidised by the taxpayers or waiver of Rs 321 crores be granted in such tragic circumstances to casino operators.
In this case, the petitioners seek to pass off their burden to the people and honest taxpayers. This petition is an attempt to seek public subsidies for the casino operations. Ultimately, the State Government functions based on the taxes collected from its people, the High Court also said.
Suppose the State Government is compelled to forgo this amount of Rs 321 crores this amount will ultimately have to be recouped by taxes or by abandoning or postponing some of its functions as a welfare State. The question of reasonableness, arbitrariness and fairness must also be considered from this perspective. This perspective is not entirely irrelevant, as suggested, the High Court said.
The High Court, based on a statement by the State Government will not recover the 12% penal interest. “This is provided the Petitioners pay the entire principal amount within four weeks,” the High Court said adding that the state can withdraw the amounts deposited by the petitioners in this Court since this amount represents only fifty per cent of the arrears.
