Dispute over Tax Chief: Billions of rupees uncollected

Private sector tax dues have exceeded fifty billion rupees and keep mounting due to a continuing legal dispute, Inland Revenue Department ( IRD) officials said.

It has been caused by companies challenging in court the legal authority of the IRD's Acting Commissioner General to carry out tax collection responsibilities. Cases have been filed in the Supreme Court, the Court of Appeal and the Civil Appellate High Court seeking rulings.

The IRD's legal section has also officially brought this to the attention of senior officials and the Attorney General’s Department.

IRD legal officers have pointed out that these court cases have become an obstacle to collecting the tax revenue due to the department.

In terms of the Inland Revenue Act, a taxpayer is entitled to apply to the Commissioner General for a ruling setting out the Tax Chief's position regarding tax issues. In such cases, the Commissioner General appoints an ‘Interpretation Committee” comprising senior officers to review the request and issue a ruling.

However, the process has come to a halt on the grounds that an Acting Commissioner General is not empowered to appoint such a committee.

Also held up is the scheme of reward payments to informants providing information on persons failing to pay taxes.

This is because only a permanent Commissioner General is authorised to make such payments.

A tussle over the appointment of a permanent Commissioner General has gone on for seven months. Controversy reigned over a decision to appoint a former Central Bank Deputy Governor to the position. However, he was not able to carry out duties in view of protests by unions and employees.

To overcome the issue, a Senior Deputy Commissioner was appointed as the Acting Commissioner General.

Two IRD trade unions – The Inland Revenue Commissioners Association and the Inland Revenue Staff Officers Association -- also filed legal action against the move to appoint the Central Bank official and obtained a court ruling that a person within the Department should be appointed to the position.

Inland Revenue Staff Officers Association Secretary J.T. Chandana told the Sunday Times that despite the court order the Finance Ministry has not taken steps to appoint a Commissioner General from among the IRD cadre.

A senior Finance Ministry official said the Cabinet would have to take a decision regarding the appointment.

The IRD has been set a target of Rs. 800 billion this year, but officials warned that they would not be able to meet the target due to the dispute.