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New Bill to amend Inland Revenue Act will deny citizens equal protection of the law: Chartered Accountant/BASL
Two Fundamental Rights (FR) petitions challenging the constitutionality of a new Bill to amend the Inland Revenue Act will be taken up in the Supreme Court tomorrow.
The new Bill, titled “Inland Revenue Amendment” to amend the Inland Revenue Act No. 24 of 2017 is being challenged by the Bar Association of Sri Lanka (BASL) and Raja Nihal Hettiarachchi, a senior professional in auditing, taxation and accountancy.
The petition by the BASL has been filed by its President Saliya Pieris and Secretary Rajeev Amarasuriya.
The petitioners note that Clause 47 of the Bill seeks to introduce a new section 190A, which purports to impose a ‘professional duty’ on any ‘auditor, tax practitioner, tax advisor or approved accountant’ vis-à-vis the Commissioner General of Inland Revenue.
“The ‘professional duty’ that can be owed by any ‘auditor, tax practitioner, tax advisor or approved accountant’ can only be towards his client, and not the Commissioner General of Inland Revenue. In particular, the ‘professional duty’ owed by an Attorney-at-Law providing services as a ‘tax practitioner’ can only necessarily be towards his client, and cannot ever be towards the Commissioner General of Inland Revenue,” the petitioners point out.
As such, the petitioners argue that Clause 47 is violative of Article 14 (1) (g) of the Constitution which stipulates that every citizen has the freedom to engage by himself or in association with others in any lawful occupation, profession, trade, business or enterprise.
The petitioners also take issue with Clause 47 for empowering the Commissioner General to institute legal action before a Magistrate’s Court against a person who in his or her opinion,‘deliberately misinterprets any provision of this Act or any other Act administered by the Commissioner-General, or any regulation, rule or order made thereunder’.
“Interpretation is to convey one’s idea of the meaning of any word or conduct or event, etc. There can be no doubt whatsoever that legal provisions by their very nature are subject to interpretation vis-à-vis their scope, applicability, relevance, consequence, etc.” they further note.
Moreover, any interpretation is a purely subjective point of view of the person interpreting and cannot be visited with criminality only for the reason of taking that point of view as the correct or appropriate one, they add.
The petitioners note that Clause 47 of the Bill “seeks to make the Commissioner General the Prosecutor, the Judge, the Jury and the Executioner.”
Meanwhile, Clause 40 of the Bill seeks to amend the Inland Revenue Act to enable a full-time employee of the taxpayer to disclaim and/or evade all responsibility and/or liability for the contents of the return, whilst imposing on every other person who ‘prepared, filled or assisted to prepare or fill for a payment’ the return or part of the return responsibility for same. As such, the clause is in violation of the Constitution, they argue.
The petition filed by Raja Nihal Hettiarachchi, too, expresses similar objections to the Constitutionality of the Bill, particularly in relation to Clause 47 and 40.
He states that insofar as Chartered Accountants are concerned, the Institute of Chartered Accountants Act No. 23 of 1959 (as amended) regulates the conduct of Chartered Accountants and the Rules of the Court regulate the conduct of Attorneys-at-Law, and both provide for penalties/procedures to be followed for any breach of the professional duty owed to a client.
However, Clause 47 seeks to impose on such professionals a purported ‘professional duty’ towards the Commissioner General of Inland Revenue.
He also points out that Clause 47 provides for a prevention order prohibiting the ‘auditor, tax practitioner, tax advisor or approved accountant’ from ‘practicing in such capacity’. A Chartered Accountant however, is subject to the control of the Institute of Chartered Accountants as stipulated in the Institute of Chartered Accountants Act No. 23 of 1959 (as amended).
Therefore, such a draconian provision will necessarily undermine the Rule of Law, and lead to extreme abuse and rampant corruption in revenue administration, and will subject the taxpayer to be at the whims and fancies of the tax officials in respect of Return of Taxes and remedies, and thereby, deny the citizen equal protection of the law guaranteed and protected by Article 12 (1) of the Constitution, he contends.