A petition has been filed before the Supreme Court stating that 10 liquor manufacturing companies in Sri Lanka have failed to pay over 678 crore rupees to the government. Sri Lanka Latest News
This has been stated before the Supreme Court through a fundamental rights petition submitted (on January 26) by a group of social activists including Sanjay Mahawatta requesting an order to collect the tax money from 10 alcohol production companies that have failed to pay taxes to the government.
Which liquor manufacturing companies have failed to pay taxes as mentioned in the petition?
As mentioned in the relevant petition, 10 alcohol production companies have been named which have failed to pay the tax arrears to the government.
Those liquor manufacturing companies are,
- W.M. Mendes Company
- North West Distilleries Pvt
- Global Blenders and Bottlers Pvt
- McCallum Brewing Company
- Kalutara Distilleries Company
- Finland Distilleries Corporation Pvt
- Synergy Distilleries Pvt
- Randenigala Distilleries Lanka Company
- Higurana Distilleries Pvt
- Royal Ceylon Distilleries Pvt
Who are the respondents?
The Commissioner General of Excise, the Secretary of the Ministry of Finance, the Minister of State for Finance Ranjith Siambalapitiya, the Auditor General and ten relevant alcohol manufacturing companies have also been named as respondents in this petition filed through lawyer Manjula Balasuriya.
“Due to the non-payment of liquor taxes imposed by the government on alcohol products by those companies, the state revenue has decreased. This has directly affected the national economy due to the failure to recover the tax money evaded by the alcohol manufacturing companies. 101 billion of the total tax revenue due to the economy in 2022 has been lost. Among them, 26 billion are tax revenues. According to the agreement reached with the International Monetary Fund, the Government of Sri Lanka had planned to earn 650 billion rupees in tax revenue in the first quarter of 2023. But during that period, the government could earn only 578 billion rupees. This serious situation has arisen due to the existing weaknesses in the tax collection process by the government and lack of proper mechanism.” Petitioners have stated.
How much is the defaulted tax?
The petitioners had requested the Commissioner General of Excise under the Right to Information Act to provide information about the tax defaulted by the liquor companies to the government.
It is mentioned in the petition that the Commissioner General of Excise had sent a reply on the 23rd of last December.
According to the reply letter of the Liquor Tax Commissioner General, it has been revealed that the above 10 alcohol manufacturing companies have failed to pay an amount of over 678 crore rupees (6,785,370,777.64) as tax.
How to pay taxes?
75 per cent of the price of a bottle of alcohol is tax. The tax is collected directly from the consumers at the time of sale of alcohol.
According to the gazette notice issued in terms of Section 22 of the Liquor Tax Act, it has been stated that a liquor manufacturing company must pay the tax for the products made in the first 15 days of the month before the 16th to the 31st of that month.
In addition, it states that the tax to be paid for alcohol products made from the 15th to the 31st of that month must be paid from the 31st of that month to the 15th of the following month.
The Excise Department has also been empowered through the relevant clause to impose a surcharge of three times the amount of the tax per month for unpaid taxes.
“The law also states that these taxes must be paid during the annual renewal of the licenses issued to these liquor companies. In spite of such serious legal provisions, the liquor manufacturing companies are deliberately evading the relevant tax payments and it appears that the responsible parties including the Excise Department are not working in a sloppy manner to recover the said money.” The petitioners have alleged in their petition.
Have the respondents including the Commissioner General of Excise violated the fundamental rights of the people?
The petitioners point out that a very difficult situation has arisen due to the non-payment of taxes to the economy from alcohol manufacturing companies.
Due to this, the petitioners have pointed out that the government has imposed unbearable taxes on the goods and services provided to the people and have alleged that the consumers have been in further difficulty due to the increase of the VAT rate from 15 per cent to 18 per cent.
In spite of this, the respondents, including the liquor tax department, are deliberately neglecting their legal duty to collect tax and are neglecting to collect tax and are also issuing annual licenses to the liquor manufacturing companies who have to pay huge arrears against the law, the petitioners allege.
Through this, the petitioners have alleged that the respondents including the Excise Commissioner General have violated the fundamental rights of the citizens of this country.
What are the reliefs sought from the court?
The petitioners have requested the following reliefs from the court through this petition filed against the liquor manufacturing companies that have failed to pay taxes.
- Issuing an order to the Commissioner General of Liquor Tax to submit a report to the court about the alcohol manufacturing companies that have failed to pay taxes so far and the taxes that they have failed to pay.
- Issuance of an interim restraining order to the Commissioner General of Excise temporarily suspending the licenses issued to the respondent liquor manufacturing companies that have failed to pay taxes until the petition is heard and a final decision is rendered.
- Issuance of an interim order to the Commissioner General of Excise to prevent the re-issuance of licenses to the respondent liquor companies which have defaulted in payment of taxes.
- Through this petition, the petitioners have also requested the Supreme Court to issue an order to the Commissioner General of Excise to take steps to collect the unpaid taxes from the respondent liquor manufacturing companies.