Reputed professional consultant, Nihal Sri Ameresekere, espousing good governance and the enforcement of the rule of law has filed a Motion through his Lawyers Abdeen Associates in CA Writ Application No. 1661/2003 moving to withdraw the said Application, displaying sheer disgust on the apathy on the part of the successive Commissioners General of Inland Revenue and Attorney Generals, to have the statutory provisions of the Inland Revenue Act duly enforced.
Ameresekere’s Motion re-produced in full below, discloses shocking mal-administration in the revenue administration by the Inland Revenue Department, which comes under the purview of Secretary, Ministry of Finance P.B. Jayasundera, and President Mahinda Rajapaksa as the Minister of Finance. Such shocking revelations are at a time, when daily adhoc taxes and levies are being imposed by the Ministry of Finance, spiraling the cost of living affecting the poor masses.
On the assurance of having terms of settlement entered into from as far back as October 2005, to have the statutory provisions enacted by Parliament complied with and enforced, as had been suggested by then Attorney General, K.C. Kamalasabayson P.C., the Attorney General Department had moved for several dates to have the terms of settlement entered into, which had been finalized. But the Commissioner General of Inland Revenue had made observations that his Department was incompetent to enforce and comply with the statutory provisions of the Inland Revenue Act enacted by Parliament, thereby making a mockery and farce of the legislative process and the enforcement of the rule of law.
In simple terms, from as far back as 1979, the Inland Revenue Department was statutorily required to refer instances of any suspected customs offences to the Director General Customs for investigations, and to refer instances of any suspicions of Exchange Control violation to the Controller of Exchange for investigations, and to refer instances of suspicions of bribery, where income is not compatible with the assets and known sources of income, to the Attorney General to be transmitted to the Commission to Investigate Allegations of Bribery or Corruption. The number of such references has never been reported in the Annual Report of the Inland Revenue Department
In addition the Inland Revenue Department which administers the enforcement of the Value Added Tax (VAT) statute, is also statutorily required for the relevant sale turnovers of the respective tax payers to be reported to the Provincial Income Tax Commissioners, for the correct collection of Turnover Taxes at the Provinces. This too is more in neglect than complied with.
The VAT fraud had been discovered and reported upon by the Auditor General as far back as June 2005, but then Commissioner General of Inland Revenue had failed and neglected to take any action, except to appoint an Internal Committee, which had led to the documents going missing hampering subsequent criminal prosecutions. The Report of the Presidential Commission of Inquiry into the VAT fraud is yet to be made public.
The matter had dragged on for over 6½ years, with the Case having been mentioned in the Court of Appeal for a settlement as had been moved by the Attorney General’s Department on 43 different Court days, during the tenure of office of Attorney Generals C.R. de Silva P.C., Mohan Peiris P.C., and Eva Wanasundera P.C. As a result Ameresekere in sheer disgust has called the bluff and instructed his Lawyers Abdeen Associates to file a Motion, revealing the shocking apathy and lethargy on the part of the law enforcement system in the country, which speaks volumes on the inefficiency of the system for revenue administration, which is the prime responsibility of the Ministry of Finance, and indifference towards the enforcement of the rule of law by the high profile Respondents in the said Application.
The foregoing pathetic tragedy of revenue administration had been notwithstanding very high profile parties having been Respondents in Ameresekere’s Application, which included Commissioner General of Inland Revenue, Director General of Customs, Director General of Excise, Controller of Imports & Exports , Controller of Exchange, Governor Central Bank, Chairman Commission to Investigate Allegations of Bribery or Corruption, Secretary Ministry of Finance, Minister of Finance, Speaker of Parliament, Secretary to the President and the Attorney General.
Ameresekere’s Motion due to be taken up in the Court of Appeal on the next date 19 July is given below:
WHEREAS this Application was filed on 29.9.2003 in the circumstances of the Petitioner crusading against the perverse Inland Revenue (Special Provisions) Acts Nos. 10 and 31 of 2003, referred to as the ‘infamous amnesty’.
AND WHEREAS the 11th Respondent, Secretary to the President by Affidavit dated 15.12.2003, supported the Petitioner’s Application and concurred therewith, including the reliefs prayed for therein; and the successor in Office of the Secretary to the President had not retracted on such position, but on the contrary, both the 8th Respondent, Secretary, Ministry of Finance and 11th Respondent, Secretary to the President, had intimated that they concurred with the stance of the Petitioner.
AND WHEREAS as a consequence of the Petitioner’s endeavours, a Reference having been made under Article 129 of the Constitution by the President of Republic to His Lordship Chief Justice, the Supreme Court in SC Reference No. 1/2004 denounced the aforesaid perverse Statutes, inter-alia, castigating them;
- ‘as inimical to the rule of law’
- ‘to be violative of the ‘Universal Declaration of Human Rights and International Covenant on Civil & Political Rights’
- ‘as having defrauded public revenue, causing extensive loss to the State’
AND WHEREAS in the face of the public outcry against such perverse Statutes, and the aforesaid Opinion of the Supreme Court, the Legislature by Inland Revenue (Regulation of Amnesty) Act No. 10 of 2004 repealed all the obnoxious provisions of the aforesaid Statutes, and retained only the pure Income Tax Amnesty, consequent to SC Determination No. 26/2004 on the corresponding Bill, reiterating the foregoing castigations of the aforesaid Statues.
AND WHEREAS consequently the Petitioner, as then Chairman of the Public Enterprises Reform Commission, having been directed by the President of the Republic, to inquire into the foregoing, the Petitioner discovered that even as late as June 2005, the 1st Respondent, Commissioner General of Inland Revenue and/or the statutory authorities had not given effect to the provisions of the said Inland Revenue (Regulation of Amnesty) Act No. 10 of 2004 enacted by the Legislature, and further that no action had been taken on the colossal VAT fraud, which had been discovered and queried by the Auditor General at that time in June 2005.
AND WHEREAS in the context of the said repealing of the obnoxious provisions of the aforesaid impugned Statutes, the Petitioner by Motion dated 20.7.2005 moved to amend the prayers in this Application.
AND WHEREAS in the given circumstances, discussions having been had with late Attorney General K.C. Kamalasabayson P.C., the Attorney General appearing for the Respondents having consented to the amendment of prayers, intimated to Your Lordship’s Court on 11.10.2005 that Terms of Settlement are to be filed in this matter.
AND WHEREAS thereafter this matter came up before Your Lordships’ Court from the said date, 11.10.2005 up to 29.3.2012 on 43 days, as per the Schedule attached marked “A”, essentially for the purpose of concluding the said Terms of Settlement, which had been drafted.
AND WHEREAS in conformity with what is stated herein, a draft of the Terms of Settlement, after several revisions, was finalized in March 2009, and set out in a Consent Motion submitted to the Attorney General, which is attached marked “B”
AND WHEREAS intriguingly the said Terms of Settlement were not entered into, notwithstanding, we on behalf of the Petitioner, having addressed the following Letters to succeeding Attorney Generals, with copies thereof to the Respondents, attaching drafts of the Terms of Settlement, which was in the process of formulation.
- To Attorney General C.R. de Silva P.C. – Letters dated 11.9.2007, 30.1.2008, 2.4.2008 and 24.7.2008 (attached compendiously marked “C”)
- To Attorney General Mohan Peiris P.C. – Letters dated 19.3.2009 and 11.2.2011 (attached compendiously marked “D”)
- To Attorney General E. Wanasundara, P.C. – Letter dated 15.3.2012 (attached marked “E”)
AND WHEREAS we on behalf of the Petitioner filed Motion dated 17.11.2008 in Your Lordships’ Court to have this matter referred to the Supreme Court in terms of Article 126(3) of the Constitution, vis-à-vis, the violation of fundamental rights, whereupon assurances was given by the Attorney General, that the Terms of Settlement would be finalized, which however did not happen.
AND WHEREAS consequently the Petitioner having been given the ‘Observations’ of the 1st Respondent, Commissioner General of Inland Revenue, on the said draft of Terms of Settlement, we on behalf of the Petitioner by the aforesaid Letter dated 19.3.2009 tendered the Petitioner’s ‘Responses’ thereto.
AND WHEREAS among the issues, which intriguingly-stalled such Terms of Settlement, arose from the failure and neglect on the part of the 1st Respondent, Commissioner General of Inland Revenue, to give effect to the following material provisions of Inland Revenue Statutes, which had been enacted by the Legislature, namely:
i) “in terms of Inland Revenue Act No. 28 of 1979 Section 158 (10) / Inland Revenue Act No. 38 of 2000 Section 178 (10) / Inland Revenue Act No. 10 of 2006 Section 209 (10), to the 5th Respondent, as had been already called for by the 5th Respondent, Controller of Exchange information disclosed in Declarations which contain disclosure of foreign income and/or foreign borrowings and/or foreign debts and/or foreign assets, to be investigated and dealt with by the 5th Respondent in terms of respective laws administered and enforced by him”
ii) “in terms of Inland Revenue Act No. 28 of 1979 Section 158 (10) / Inland Revenue Act No. 38 of 2000 Section 178 (10) / Inland Revenue Act No. 10 of 2006 Section 209 (10) to the 2nd Respondent, Director General of Customs, where it appears that any person has committed an offence under the Customs Ordinance”
iii) “to report by himself and/or his agents and/or assigns, in terms of Inland Revenue Act No. 28 of 1979 Section 158 (5) (iv) / Inland Revenue Act No. 38 of 2000 Section 178 (5) (d) / Inland Revenue Act No. 10 of 2006 Section 209 (5) (d) to the Attorney General to be forwarded to the 7th Respondent, Chairman, Commission to Investigate Allegations of Bribery or Corruption for investigation, any case where the 1st Respondent and/or his agents and/or assigns suspect/s from information available to him and/or them, that any person is guilty of bribery, as per the Declarations made to the 1st Respondent under Inland Revenue (Special Provisions) Act No. 10 of 2003 and Inland Revenue (Special Provisions) (Amendment) Act No. 31 of 2003, and now deemed to be Declarations made under and in terms of the Inland Revenue (Regulation of Amnesty) Act No. 10 of 2004 or otherwise.” (i.e. the Inland Revenue Statutes enacted after 1994 had not replaced the Attorney General, with the Commission to Investigate Allegations of Bribery or Corruption, who replaced the Bribery Commission)
AND WHEREAS appallingly, the 1st Respondent, Commissioner General of Inland Revenue, in his aforesaid ‘Observations’ had stated that the Officials of the Inland Revenue Department ‘did not have competency to ascertain’, as required, such facts and to refer ‘suspected’ transactions, as statutorily mandated, as aforesaid, by the Inland Revenue Statutes, to the relevant law enforcement authorities, namely, the Director General of Customs, the Controller of Exchange and the Hon. Attorney General for transmission to the Commission to Investigate Allegations of Bribery or Corruption, for investigations thereinto.
AND WHEREAS the 1st Respondent, Commissioner General of Inland Revenue’s ‘Observation’ also appallingly included, that the matters referred to VAT collection should be excluded, since VAT did not come under the aforesaid perverse Statutes, whereas colossal VAT frauds had taken place defrauding public revenue, as had been reported in terms of Article 154(6) of the Constitution to the Legislature in a Special Investigative Report in July 2006 by the Auditor General.
AND WHEREAS it is abundantly clear to the Petitioner, that the provisions of revenue administration Statutes, enacted from as far back as 1979, are not being enforced and the 1st Respondent, Commissioner General of Inland Revenue, is steadfastly unwilling to force the same, and furthermore that succeeding Attorney Generals have admittedly been unable to have the said statutory provisions, which had been enacted by the Legislature, enforced.
AND WHEREAS organizations and individuals are required to report ‘suspicious transactions’ and/or not to aid or abet therewith in any manner, whatsoever, in terms of the provisions of the following Statutes, and the 1st Respondent, Commissioner General of Inland Revenue, being a statutory authority, carries a greater onus of responsibility in such regard
- Prevention of Money Laundering Act No. 5 of 2006
- Financial Transactions Reporting Act No. 6 of 2006
- Convention on the Suppression of Terrorist Financing Act No. 25 of 2005
AND WHEREAS the ‘stalling’ of this matter since 11.10.2005 in the manner aforesaid, over a period of over 6 years, makes it amply clear to the Petitioner, that it is futile for him to waste his valuable professional time and efforts in the public interest, to have the aforesaid revenue administration Statutes enforced to uphold the rule of law, in the face of the aforesaid unwillingness on the part of the statutory authorities and the indifference of the part of the succeeding Attorney Generals; with the Treasury unconcerned of this pathetic plight, and the citizenry being burdened with additional adhoc taxes and levies.
NOW THEREFORE in such circumstances, the Petitioner respectively moves to withdraw this Application.
Copies of this Motion and the attachments referred to herein having been sent by Registered Post to the Hon. Attorney General and the Respondents, for them to be notified thereof, the Registered Postal Article Receipts are attached hereto.