Supreme Court to decide on petition challenging VAT on 22 June

By S.S. Selvanayagam

The Supreme Court yesterday fixed for support on 22 June the rights petitions challenging the intended imposition of additional liabilities pertaining to multi-stage tax called Value Added Tax (VAT) and Nation Building Tax (NBT).

The Bench comprised Chief Justice K. Sripavan and Justices Eva Wanasundera and Priyantha Jayawardane.

Five petitions have been filed against the said intended imposition of taxes. Former Minister Wimal Weerawansa, Ven. Maduruoya Dharmisiri Thero, Ven. Bengamuge Nalaka Thero, Centre for Policy Alternatives and Sivapathasunderam Sivakumar are the Petitioners.

Manohara de Silva PC, Shavindra Fernando PC and Viran Corea appeared for the Petitioners separately. Senior Deputy Solicitor General Farzana Jameel appeared for the State.

Leader of the National Freedom Front and former Cabinet Minister Weerawansa filed this application as being in the public interest, alleging that it is ultra vires, illegal, arbitrary, unlawful and violative of fundamental rights to equality, freedom from arbitrary arrest and detention and the freedom to engage in any lawful occupation and profession, etc.

He cited Finance Minister Ravi Karunanayake, Secretary to the Treasury and Finance Ministry R.H.S. Samarathunga, Commissioner General of Inland Revenue Kalyani Dahanayake and the Attorney General as Respondents.

He states that the Commissioner General of Inland Revenue on 29 April issued a notice bearing the heading ‘Notice to Taxpayers’ and the title ‘Value Added Tax (VAT) and Nation Building Tax (NBT)’ and declared that as informed by the Ministry of Finance, changes would be implemented with effect from 2 May.

The said notice is supplemented by a detailed notice bearing the heading ‘Implementation of Proposals on Value Added Tax (VAT) and Nation Building Tax (NBT) on the instruction of the Ministry of Finance,’ he adds.

He claims the said heading is misleading and contrary to law as the Commissioner General of Inland Revenue is not vested with any authority or power to implement proposals on instructions of the Ministry of Finance, which have no authority of law.

He claims there are no amending laws pertaining to VAT or NBT that have the effect of the above changes pertaining to imposition of such taxes.

He laments the said notice and administrative decisions taken to collect such taxes on changed tax rates amount to abrogation of fiscal powers of Parliament.

He bemoans there is no law in force authorising the Minister/Ministry or any other officer of the Finance Ministry or the Commissioner General of Inland Revenue to arbitrarily and capriciously impose such additional taxes and liabilities on the general public.

He alleges the tax is borne by the final or the ultimate consumer of goods and services and that it is an indirect tax and the Government will receive at the end, through all the intermediary suppliers in the chain of production and distribution, an amount equal to the amount paid by the final consumer.

He is seeking a declaration that the notices published by the Commissioner General of Inland Revenue are null and void with no force or effect in law.

He is seeking another declaration that the notice bearing the title ‘Amendments to VAT and NBT and Share Transaction Levy (SLT)’ published by the Finance Minister and Secretary to the Treasury are null and void with no force or effect in law.

He is praying for interim relief suspending the operation and/or implementation of these notices.