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That Customs amnesty: They pay nothing: K. N. Choksy
By Ayesha R. Rafiq
The UNF Government's latest tax amnesty, including an across-the-board amnesty for Customs offences, which is estimated to result in the loss of Billions of rupees to State coffers has come in for wide-spread criticism from the public on grounds that the Government is encouraging wrong-doings and helping party financiers.

In the midst of this comes some confusion within the Government as to whether pending customs cases will fall within the ambit of this amnesty. Sections of the Government say that the Attorney General will review these on a case-by-case basis with a view to settling them, or contesting them.

The Sunday Times asked Finance Minister K.N. Choksy, who introduced this controversial amnesty to clear the blurred picture. He says, clearly, that the amnesty applies to everyone, including those who have cases pending in court.
Excerpts from the interview:

There appears to be confusion at the highest levels of Government that under the customs amnesty introduced by you, cases pending in court for violations will be reviewed by the Attorney General with a view to settling them. But are they also not entitled to this amnesty?

Mr Choksy: There has been much misunderstanding of the provisions of the Amnesty Law. Pending prosecutions will not be withdrawn nor investigations discontinued unless the citizen or company involved first makes a declaration under Section 2 of the new law, to the Commissioner General of Inland Revenue or the Director General of Customs owning and accepting that such persons had not complied correctly with the laws relating to taxations or the Customs of exchange control.

In other words the person concerned has to accept that he or she was a defaulter. It is only upon acceptance of such fact and declaring the same to the authorities that the law provides for the discontinuance of prosecution or investigations and the waiver of penalties which had been imposed.

Reference has been made to the cases of Ceylon Grain Elevators and Stassens. Neither of these companies is eligible to enjoy the Amnesty because each of them has instituted court proceedings asserting that they had committed no wrong and that the Customs authorities had acted unlawfully in imposing penalties on them. Quite apart from making declarations and owning that they were defaulters, they are asserting that they are not defaulters. In the circumstances they are not eligible for immunity under the new law.

What happens if they withdraw the case?
They could obtain the benefits of the new law only if they withdraw the cases instituted by them and make declaration to the Customs authorities that their import declarations were false.

There have been differing views - at the highest levels of your Government - on whether pending cases will proceed or not.

The position as stated by me is made clear by sections 2 and 4 of the new law. There is no other interpretation possible. The decision to grant an across-the-board amnesty was taken after careful consideration of all competing factors. It was found that early amnesties were not successful because they were only partial and a person making a declaration and obtaining relief from tax defaults could find himself as a result of his declaration being prosecuted under the Exchange Control Act or Customs Ordinance. A wider amnesty was therefore considered necessary.

What is the total amount of declarations made in rupee terms?

Up to date under the new law more than 1000 declarations have been made, and there are new declarations coming in all the time. I have up to now not, however, asked the Commissioner General of Inland Revenue or the Director General of Customs to see or go through the declarations as they operate under the secrecy provisions. Also not all of the declarants have made declaration in monetary terms. Several of them have asked for an opportunity to meet either the Commissioner General of Inland Revenue or the Director General of Customs to make their declarations.

How does the amnesty in any way ensure that 'black monies' can come into the economy or as you stated in your speech in parliament that 'endeavours would be made through amendment to the tax laws to harness large sums of money that have not been declared for tax over the past several years into development activities'?

There are large sums of money in circulation which have not been disclosed for taxation. The object of the amnesty is to enable that money to come into the formal economy and be made use of for development purposes. In the past monies that have not been declared for tax purposes have been used under the table and therefore as black money. With the amnesty this money will be declared and used as white money.

All persons making declarations and curing their past defaults will become tax payers and have tax files opened under their names from April 1, 2003. The amnesty cures the past only upto March 31, 2003. The tax base will therefore be whitened from April 1, 2003. The time limit for declarations under the new law will expire on the June 30, 2003. The law is not open ended.

From your explanation is it then clear that persons in court today can apply for an amnesty tomorrow and then the case is closed?

Yes, if that person makes a declaration under Section 2, owning up their fault and accepting that he is a defaulter, then section 4 is applicable to him.

l Does the declarant pay any money to the customs at all?

No, he pays nothing.

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