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By Ashwin Hemmathagama – Our Lobby Correspondent
The Supreme Court has shot-down the proposed Inland Revenue Bill highlighting inconsistencies with the Constitution.
The Bill was tabled in Parliament for the imposition of income tax for any year of assessment commencing on or after 1 April, 2017, and introducing a new income tax structure aimed at closing existing loopholes in revenue collection.
According to the Supreme Court determination, Clauses 97 and 98 are inconsistent with Article 12 of the Constitution and may only be passed by a special majority required under the provision of paragraph 2 of article 84. “However, if those clauses are amended as agreed upon by the Additional Solicitor General, this inconsistency could be removed,” held the Supreme Court. Quoting Deputy Treasury Secretary S. R. Attygala, Reuters yesterday reported that the Finance Ministry would amend the clauses if they were found to be inconsistent with the Constitution.
“Clause 100 (1) (e) is inconsistent with Article 12 of the Constitution and may only be passed by a special majority, as required under the provision of paragraph 2 of Article 84. However, if it is amended as suggested by the Court, this inconsistency could be removed,” added the Supreme Court in its determination.
“Clause 167 is inconsistent with Article 12, 13, and 14 (1) h and l of the Constitution and may only be passed by a special majority, as required under the provision of paragraph 2 of Article 84. However, if that clause is amended as agreed by the Additional Solicitor General this inconsistency could be removed.
Clause 200 is inconsistent with Articles 3 and 4 of the Constitution and may require to be passed by a special majority required under the provision of paragraph 2 of Article 84 and approved by the people at a referendum by virtue of Article 83,” it added.
Prime Minister Ranil Wickeremesinghe tabled the Bill in Parliament for the first reading on 5 July expecting a clear path.
“The Bill has hindered the space for tax evasion removing certain loopholes in the prevailing Act. The Bill was prepared by Ministry officials. Any concerned party can go before the court now over its content. I propose drafting Bills in simple English language to make it easy for the ordinary public to understand. Many other countries have adopted similar measures now,” said PM Wickremesinghe moving the Bill, which had 22 Chapters running up to 218 pages. However, within a few days, 10 petitions were filed challenging the Bill.
Key Take
The following clauses were deemed not in compliance by the Supreme Court
(1) For the purposes of this Act, there shall be appointed a Commissioner-General, such number of Deputy Commissioners-General, Senior Commissioners, Payment of tax on realisation of investment assets by partnerships and trusts. Officers.
Inland Revenue Commissioners, Senior Deputy Commissioners, Deputy Commissioners, Assistant Commissioners and other tax officials, as may be necessary.
(2) A tax official exercising or performing or discharging any power, duty or function conferred or imposed on or assigned to the Commissioner- General by any provision of this Act, shall be deemed for all purposes to be authorized by the Commissioner-General to exercise, perform or discharge that power, duty or function until the contrary is proved.
(3) The Commissioner-General, an officer of the Department, or any other person authorised by the Commissioner-General to perform any functions under this Act shall not be personally liable in civil proceedings in connection with any act done by the person in good faith in the discharge of those functions.
(4) The Commissioner-General may specify such forms as the Commissioner-General considers appropriate for the purposes of this Act.
(1) The Commissioner-General may delegate to an officer of the Department a power or duty conferred or imposed on the Commissioner-General by this Act, other than this power of delegation.
(2) The Commissioner-General may delegate a power or duty either to a specific individual tax official or to the incumbent of a specific post within the Department.
(3) Subject to such conditions, the Commissioner-General may provide that any information, declaration, or document required to be furnished to the Commissioner-General is to be supplied to such other person as the Commissioner-General may nominate.
(4) A delegation under this section shall not prevent the Commissioner-General from performing a delegated power, duty, or function.
The...
(5) A tax official shall not exercise a power, or perform a duty or function under this Act; that –
(a) relates to a person in respect of which the tax official has or had a personal, family, business, professional, employment, or financial relationship; or
(b) otherwise presents a conflict of interest.
(6) The Commissioner-General may, at any time, amend or revoke in writing a delegation under this section.
Clause 100 (1) (e)
(e) the Attorney-General for the purpose any civil or criminal proceedings or obtaining the opinion or advice of the Attorney-General;
Clause 167.
(1) Where the Commissioner-General or an authorised officer has reasonable grounds to believe that a person may leave Sri Lanka without paying:—
(a) tax that is or will become payable by the person; or
(b) tax that is or will become payable by a company in which the person is a controlling member, the Commissioner-General or authorised officer may issue a departure prohibition order, in writing, to the Controller of Immigration and Emigration stating:— (i) the name and address of the person; (ii) the amount of tax that is or will become payable by the person or by the company in which the person is a controlling member.
(2) The Commissioner-General or authorised officer shall, as soon as practicable after issuing a departure prohibition order, serve a copy of the order on the person named in the order.
(3) Where a departure prohibition order is issued, the Controller of Immigration and Emigration shall exercise the powers that the Controller lawfully possesses, or cause an officer under his direction to exercise such powers, so far as is necessary to prevent the person named in the order from departing Sri Lanka.
(4) A departure prohibition order shall remain in force until revoked by the Commissioner-General or authorised officer. Departure Prohibition Order.
(5) The Commissioner-General or authorised officer shall immediately revoke a departure prohibition order where—
(a) the person makes payment in full of the tax payable or that will become payable by the person or by the company in which the person is a controlling member; or
(b) the person makes an arrangement satisfactory to the Commissioner-General or authorised officer for payment of the tax.
(6) As soon as practicable after making a decision to revoke a departure prohibition order, the Commissioner General or authorised officer shall serve notice of the revocation on the Controller of Immigration and Emigration and on the person named in the departure prohibition order.
(7) No proceedings, criminal or civil, may be instituted or maintained against the Government, the Controller of Immigration and Emigration, the Commissioner-General, an authorised officer, or a Customs, Immigration, Police or other officer for anything lawfully done under this section.
(8) In this section, “Controller of Immigration and Emigration” means the Controller of Immigration and Emigration.
Clause 200
In interpreting a provision of this Act, a construction that would promote the purpose or object underlying the provision or the law (whether that purpose or object is expressly stated in the law or not), shall be preferred to a construction that would not promote that purpose or object.
(2) Subject to subsection (5), in interpreting a provision of this Act, if any material that does not form part of the law is capable of assisting in ascertaining the meaning of the provision, consideration may be given to that material:
(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision, taking into account its context in thisAct and the purpose or object underlying this Act; or
(b) to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text and taking into account its context in this Act and the purpose or object underlying this Act, leads to a result that is manifestly absurd or is unreasonable.
(3) Without limiting the generality of subsection
(2), material that may be considered in interpreting a provision of this Act shall include:
(a) all matters not forming part of the Act that are set out in the document containing the text of the Act, as printed by the Department of Government Printing;
(b) any treaty or other international agreement or international assistance agreement that is referred to in the Act;
(c) any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of Parliament, by a Minister, before the time when the provision was enacted;
(d) the speech made to Parliament by a Minister on the occasion of a motion related to the Bill containing the provision; and
(e) any relevant material in any official record of proceedings of debates in Parliament or debates of any Parliamentary committee that considered the related Bill.
