Imposition of VAT, NBT to telecom services; FR petition re-fixed to be supported on 12 July

By S.S. Selvanayagam

The Supreme Court has re-fixed for support on 12 July the rights petition against the imposition of VAT and NBT on telecommunication services.

The Bench comprised Justices Eva Wanasundera, Priyantha Jayawardane and Upaly Abeyrathne.

A telephone user decries that the Finance Minister has no legal authority, power and/or mandate to impose multi-stage tax called Value Added Tax (VAT) and Nation Building Tax (NBT) on the telecommunications services which are, he claims, already subject to the Telecommunication Levy.

P. Liyanaarachchi, professional lawyer, in his fundamental rights petition cited the Attorney General, Finance Minister Ravi Karunanayake and the Attorney General again in terms of Article 35(1), 1st Proviso for the President Maithripala Sirisena who is responsible and answerable to the actions and/or inactions of the Finance Minister as Respondents.

Dharshana Weraduwage appeared for the Petitioner. Senior Deputy Solicitor General Farzana Jameel appeared for the Attorney General.

Petitioner states several acts on the part of the Finance Minister and the President constitutes administrative and executive action.

Petitioner states the Finance Minister had imposed among others 2% NBT and 15% VAT on the Telecommunication services in addition to the existing applicable taxes with effect from 2 May.

He states the telephone bills are already subject to among other taxes to a 25% Telecommunication Levy which was imposed in terms of the provisions of the Telecommunication Levy Act as amended.

The said Act was specifically enacted to impose the said Levy for the existed Taxes of VAT and NBT which ceased to be applicable to Telecommunications Bills with effect from 1 January 2011, he underlines.

The said tax was revised to 25% with effect from 1 January 2014 as per Amendment Act of 2014 and will continue to be applicable among other taxes to said services for the Fiscal Year 2016, he contends.

He laments if the said taxes are so imposed with the application of the already existing taxes, there is a possibility that there may be a total tax increase to 49.50%.

 He complains the Finance Minister has no legal authority, power and/or mandate to impose 15% VAT and 2% NBT on telecommunications services.

Such arbitrary, unlawful act on the part of the Finance Minister who is mandated and obliged to act only in accordance with the Constitution and the law is infringement of the fundamental right to equality, he charges.

The inaction on the part of the President who is mandated to ensure that the Constitution is respected and upheld as the Head of the State by allowing the said unlawful tax impositions by the Finance Minister is also infringement of the fundamental right to equality, he bemoans.