Government goes after delinquent hotels and casinosWith many casinos defaulting on their taxes, casino royalty irregularities have piled up to nearly Rs2 billion.
In December 2017, a division bench of now retired chief justice Gopal Parajuli and Justice Bam Kumar Shrestha ruled that hotels are not liable to pay the dues and taxes of the casino located on their premises.
With regard to money owed by Casino Nepal housed at the Soaltee Hotel, the court decided that the debts should be collected from Nepal Recreation Centre which has leased the casino from the hotel, although the licence belongs to the hotel.
As a result, the government lost Rs61 million in revenue from a single hotel.
Rakesh Wadhwa, owner of Nepal Recreation Centre who owes Rs535 million, fled. Interest on the principal has accumulated to Rs281.44 million.
In the following year, the apex court issued a contrasting verdict. According to the Tourism Department, the court said that hotels are liable to pay the dues if the casino on their premises fails.
The department said that, acting on the Supreme Court verdict issued on June 26, 2018, the Tourism Ministry on Wednesday decided to scrap the operating permit of one of Nepal's oldest five star hotels, the Yak & Yeti, and its casino licence for non-payment of taxes by its casino for a long time.
Justices Cholendra Shumsher Rana, now chief justice, and Dambar Bahadur Shahi had issued the decision.
The Yak & Yeti owes Rs420 million in royalties and other fees for the current fiscal year.
“We acted as per the court ruling and decided to close down the hotel,” Mohan Bahadur GC, director at the Tourism Department, told the Post.
Tourism Minister Prem Ale made the decision to this effect on Wednesday.
In July 2013, the government introduced regulations to keep wayward casinos under a firmer grip. It decided to get tough as the casinos were habitually defaulting on taxes and disregarding the rule barring Nepalis from entry.
In April 2014, the government decided to shut down all casinos not abiding by the Casino Regulations 2013 and terminate the licences of those defaulting on royalties.
Subsequently, the gambling houses went to the Supreme Court to have the new regulation cancelled. Three casinos—Royale, Venus and Rad—continued to operate taking advantage of a Supreme Court interim order allowing them to remain open. They did not pay their taxes and royalty fees for a long time.
Casino Royale housed at the Hotel Yak & Yeti run by Surendra Bahadur Singh under Gilt Investment operated under the old casino regulation since the Supreme Court issued the interim order on March 28, 2016.
Khem Raj Joshi, an official at the department who looks after the hotel division, said that the decision to cancel the operating permit of the Yak & Yeti was based on the Supreme Court verdict issued on June 26, 2018.
The Post asked GC whether contrasting verdicts had been issued to two hotels in a similar case. He said they could not comment on the matter.
The verdict handed down by Chief Justice Gopal Parajuli at that time, however, courted controversy.
“That’s a conflicting verdict,” said an advocate who wished to remain anonymous. “I don’t know which one will prevail. But that’s a controversial verdict.”
According to GC, they have written to the Home Ministry to shut down the Hotel Yak & Yeti and freeze its bank accounts. The hotel, however, said everything was normal on Thursday.
“We have come to know about the decision. But the management will soon speak on behalf of the hotel,” said a hotel official.
With many casinos defaulting on their taxes, with some favoured by the Supreme Court, casino royalty irregularities have piled up to nearly Rs2 billion.
The Kumari Chowk Office, which reviews government accounts under the Office of the Auditor General, has duly written on different occasions to ministries of the federal, provincial and local governments to help it recover the unpaid amounts which have been piling up for several years.
The agency has also published the names of the debtors and their ancestors going back two generations.
As per the notice, Rakesh Wadhwa, fugitive owner of Nepal Recreation Centre, owes the highest amount of Rs816.47 million. According to a document obtained by the Post, the interest on the principal alone stands at Rs281.44 million.
The company owns around 3.5 ropanis of land and a house at Kalimati which the government has planned to seize to recoup the dues.
Nepal Recreation Centre used to operate four casinos—Casino Nepal housed at the Hotel Soaltee Crowne Plaza, Casino Anna at the Hotel Annapurna, Casino Tara at the Hotel Hyatt Regency and Casino Everest at the Hotel Everest—all of which have shut down. All these hotels now have brought in new operators, mostly foreigners.
In June 2011, the government annulled the operating licence of Nepal Recreation Centre after it failed to pay taxes and royalties owed to the government.
Radhe Shyam Saraf, chairman of the Hotel Yak & Yeti that houses Casino Royale, owes Rs422.56 million, including royalty fees and other fees for the current fiscal year 2021-22.
Piyush Bahadur Amatya, chairman of The Fulbari Resort & Spa, has outstanding payments amounting to Rs376.41 million, including interest totalling Rs129.75 million.
Surendra Bahadur Singh, operator of mini casinos under the name Happy Hour, owes Rs381 million; and RD Tuttle, who opened Nepal’s first modern casino, Casino Nepal, under Nepal Recreation Centre, owes Rs1.19 million.
The now defunct Casino Anna, operated by Tapta Bahadur Bista under Annapurna International, has debts totalling Rs178.41 million to the government.
The Kumari Chowk Office has also issued notice in the name of Dinesh Bahadur Bista, executive chairman of the Hotel Soaltee that owes Rs93.59 million.
Mashkoor Ahmad Lari, chairman of the Everest Hotel in Baneshwor, owes Rs158.03 million to the government, according to the Kumari Chowk Office.
The interim order permits gaming houses to operate under the old regulation, but they are legally required to pay the annual royalty fixed by the Financial Act, department officials said.
Casino Rad operated by Kishore Silwal, Kausal Silwal and Usha Thapa Silwal under Rock International owes Rs187.6 million to the government. The owners have been operating the casino under the court’s ruling since May 2016.
“As Casino Rad has promised to pay off all its debts, the department has cleared it to bring foreign direct investment to operate it,” said Joshi, an official at the department.
“The issue of Rad will be resolved within the next two months.”
The department has also decided to close down Nepalgunj-based Dreamland Hotel as it has not been registered, said GC.
The government issues licences to operate casinos in five star hotels or resorts and mini casinos in four star hotels or resorts.
As per the casino regulation, casino operators have to pay a Rs20 million fee to obtain a casino operating licence. They are also required to renew the licence annually by paying 50 percent of the operating licence fee.
Casino operators must pay the government an annual royalty of Rs40 million set by the Financial Act.
Moreover, they are required to deposit an amount equivalent to a year’s royalty fee at the Tourism Ministry as a bank guarantee. The money must be deposited within two months of the start of a new fiscal year.
Currently, there are 22 casinos and mini casinos in Nepal. Among them are 11 casinos operating in five star hotels.
All casinos and mini casinos have remained shuttered since mid-March 2020 after anti-pandemic measures took hold.
In September last year, the government allowed the mothballed gambling houses to reopen after one and a half years, and also granted them a full waiver of the annual royalty fee for the last fiscal year ended mid-July 2021.
Casinos’ outstanding dues