Nation Building Tax Bill challenged in SC; a retrospective burden, says Petitioner

By S.S. Selvanayagam

A public interest activist lawyer filed a petition before the Supreme Court challenging the Bill titled ‘Nation Building Tax’.

Petitioner P. Liyanaarachchi in his petition filed through his lawyer Dharshana Weraduwage states that the Bill or any part thereof is inconsistent with the Constitution and seek the Special Determination of the Court.

The Bill titled ‘Nation Building Tax (Amendment)’ was published in the Supplement (issued on 19 August) to Part II of the Gazette of the Democratic Socialist Republic of Sri Lanka and has been placed on the Order Paper of Parliament on 7 September.

Petitioner states the Clauses 1, 2(2)(a)(iii), and 2(2)(b) of the bill are in vehement infringement of Articles 12(1), 13(6), 27(1), (2)(a), 04, 03, of the Constitution and duly require the approval of the people at a referendum by virtue of the provisions of Article 83.

He states the said clauses are imposing retrospective tax liability on the registered taxpayers as well as others who will fall liable with the reduction of the threshold turnover from 3.75 million to 3.0 million per quarter, with effect from 2 May and with the said liability it will subject the default persons to many penal sanctions under and in terms of many Acts.

The said clauses are fundamentally contrary to the principles of turnover taxes, which mandates and founded and rest upon the Principles of Fiscal Neutrality. With the reduction of the threshold as aforesaid, it will negatively affect the market, generating discriminations among equal suppliers and negatively affect their market positions, he states.

The said clauses attempts to ratify and/or revive many acts of nullity, of many state authorities, institutions, agents and/or many other persons, which are already subjected to Judicial scrutiny and interim relief, by way of many Fundamental Rights petitions and vehemently try to render nugatory the out-come of the said cases and infringe public trust, separation of powers and the rule of law, which are the holding pillars of the Constitution, he states.

Clause 4(2) (b) of the said Bill is a vehement infringement Article 12(1), 27(1), (2)(a), 04, 03, of the Constitution and duly require the approval of the people at a Referendum by virtue of the provisions of Article 83, since the said clause repeals the NBT exemption, which was applicable to the telecom services till 2 May, he states.

Said telecom services are already and continue to subject to among other taxes to a 25% Telecommunication Levy, which is being imposed in terms of the provisions of the Telecommunication Levy Act, No. 21 of 2011 (as amended) hitherto, he asserts.

The said Act was specifically enacted to impose the said Levy for the existed taxes of Value Added Tax and Nation Building Tax, which ceased to be applicable to telecommunications bills with effect from 1 January 2011, he states.

The said tax is applicable hitherto and will continue to apply and it was revised to 25% with effect from 1 January 2014 as per amendment Act 11 of 2014 for the said Act. This tax will continue to be applicable among other taxes to the said services, for the fiscal year 2016, he states.

The services are subject to double taxation, which is contrary to law, ethics, reasonableness and Government policy and it is a denial of legitimate expectations of the citizenry and denial of rule of law and public trust, which is a vehement infringement of Article 12(1), Read with Articles 3, 4.

Clause 5 of the said Bill is a vehement infringement Article 12(1), 27(1), (2)(a), 04, 03, of the Constitution and duly require the approval of the people at a referendum by virtue of the provisions of Article 83, since the said clauses attempts to ratify and/or revive many acts of nullity, of many state authorities, institutions, agents and/or many other persons, which are already subjected to Judicial scrutiny and to interim relief, including many Fundamental Rights petitions and infringe the public trust, separation of powers and the rule of law, which are the holding pillars of the Constitution.

He is seeking the Court for a Special Determination that the said Bill is inconsistent with one or more Articles of the Constitution of the said Republic and that in whole or in part thereof, requires the approval by the people at a referendum by virtue of the provisions of Article 83 in addition to the two-third approval of the Parliament in terms of Article 82 of the said Republic.