If this was a new tire delivered in that condition, then you should return it. OTOH if this is a gouge that you put into it, it's a different story.

I don't think the tire is seriously damaged, and would probably be OK with it. The key is whether any of the cords were damaged, or simply the rubber cover. It's the cords that provide the structure, so if they're uncut then you're good. The rubber protects the cords, and you might consider something like silicone caulk to fill the gouge.

Ultimately the deciding factor is whether the inflated tire has a lump or twist in that area indicating that the cords are fraying apart, at which point the tire is toast.