Exemption of sales taxes and customs duty time bound fiscal measure: Govt
The exemption of sales tax and customs duty on import of books is purely a time bound fiscal measure and public interest target.
The Opposition party in the press release issued last Tuesday stated that the exemption of sales tax and customs duty on the import of books is unconstitutional and violates Section 14, Section 1 of the Constitution of the Kingdom of Bhutan. The press release further states that the Ministry of Finance vide its notification dated 24th July, 2015 had exempted payment of customs duty and sales tax on all books imported during 2015 in order to encourage all Bhutanese to read, especially in the context of the National Reading Year 2015.
While the opposition party appreciates that it has been done for a good cause to support the “Year
of Reading”, the exemption is in violation of the Article 14, Section 1 of the Constitution which states that “Taxes, fees and other forms of levies shall not be imposed or altered except by law”, which is also provided for in Section 9 of the Public Finance Act (Amendment) 2012.
The provisions cited by the Ministry of Finance from the Sales Tax, Customs and Excise Act 2000in the notification to authorize this exemption are null and void as per Article 1 Section 14 of the Constitution and the Supreme Court’s verdict on the first constitutional case between the Government and the Opposition Party. The verdict states “the inconsistent provisions of the Sales Tax, Customs and Excise Act 2000 must be deemed to have been eclipsed by the latter law.” The latter law here refers to the Constitution and the Public Finance Act 2007. The exemption of taxes without due parliamentary process is a direct violation of the Constitutional provision and it clearly tantamount to alteration of taxes.
The Supreme Court Judgment further states: “Imposing and altering of taxes must be decided by the elected representatives of the people in its entirety and not only by a sub-group represented by the executive.”
“Under no circumstances the authority to impose or alter taxes may be del- egated to the Executive…. The imposition or alteration of taxes must comply with the legislative process for making laws at all times as provided under sections 234-238 of the National Assembly Act.”
The Opposition Party is deeply concerned with the repeated unlawful acts of the Government. While it is not the intention of the opposition to stop the incentives to the book dealers, but urge the Government to abide by the provisions of the Constitution and the ruling of the Supreme Court on the first Constitutional case and follow the due legislative process in all its actions.
The government has however said that exemp- tion on sales tax and customs duty is purely a time bound fiscal measure but did not abolish the customs and sales tax on the import of books in totality as incentive are time-bound and public interest targeted.
“The taxation on books has only been suspended for a year to dutifully commemorate the Reading Year 2013 in the interest of General Public.”
The government has exempted sales tax and customs duty on imported books on the basis Sales Tax, Customs and Excise Act. It says, “On the satisfaction and in the public interest, the Ministry of Finance may exempt a person from payment of Bhutan Sales Tax.”
The Ministry of Finance in a notification on 24th July this year has exempted all books imported during 2015 from the levy of customs duty and sales tax. Earlier the imported books are subjected to 20% customs duty and 5% sales tax as per the Bhutan Trade Classification Bhutan Sales Tax schedule and Customs tariff. There is no customs duty on goods imported from India. The notification further states that the levy of customs duty on books is not at all a new tax and has been levied even in the past. However books considered as low risk products physical verification of the books was not carried out.