Tax write-offs allowed in the Default Taxes (Special Provisions) Bill apply only to government institutions and departments and not to the private sector, the Supreme Court ruled last week. The ruling was made when a petition filed by chartered accountant Nihal Sri Ameresekere was taken up for hearing last Wednesday.
Court ruled that the tax “write-offs” introduced in the Bill would apply only to state institutions and departments, and that each write-off would be dealt with on a case-by-case basis. Clauses relating to the private sector would be removed from the Bill.
The petitioner claimed that material modifications and/or additions made to the aforesaid Bill at the Committee Stage of Parliament infringed Article 121 of the Sri Lanka Constitution. The Acting Solicitor General said clauses in the Bill relating to tax write-offs for the private sector would be deleted.
Petitioner Mr. Sri Ameresekere claimed that the Bill’s title and preamble had been manipulated so that taxes due from the private sector could be written off. He asserted that the purpose of the Bill was to clear the books of the Inland Revenue Department in regard to old taxes due from state corporations and departments.
Court ruled that the Treasury would decide which taxes would be paid with Treasury disbursements. Taxes that have remained unpaid for the past two years, as at 31 December 2007, would be written off.
Court also ruled that a maximum penalty of 50 per cent of the tax amount would be imposed on institutions that had defaulted on taxes for more than two years, court officials said.
The Bill will be presented to Parliament next week.
The Bench comprised Supreme Court Justices J. A. N. de Silva, J. Balapatabendi and P. A. Ratnayake.