Court orders Aloysius to state whether outstanding tax will be paid

The Colombo Additional Magistrate, Oshada Migara Maharachchi, has ordered Arjuna Joseph Aloysius, a director of W.M. Mendis & Company, to immediately inform the court whether the company will settle, in full and without further delay, the Rs. 5.8 billion in outstanding Value Added Tax (VAT) allegedly owed to the Government.

The order was issued after the court rejected a request to grant relief in respect of the outstanding tax liability, which the company has been paying in monthly instalments of Rs. 5 million since February 2023.

The Magistrate made the order in response to submissions presented on behalf of the defendant directors.

In reaching the decision, the court took into consideration submissions made by the Commissioner General of Inland Revenue, who argued that no concession should be granted because the statutory period for recovering the taxes had already elapsed and a substantial amount of tax remained unpaid.

The order was made when a case filed by the Commissioner General of Inland Revenue was taken up, seeking to recover Rs. 996 million in unpaid taxes allegedly owed by W.M. Mendis & Company for the 2016–2017 tax years.

When the case was called, defendant Arjuna Aloysius was present in court.

Counsel appearing for the defendant submitted that the Excise Department had suspended the company’s liquor licence and that its distillery had been referred for auction by banks. As a result, the company was facing financial difficulties in paying the monthly tax instalments. Counsel therefore requested the court to permit a revision of the existing instalment arrangement.

Appearing for the Commissioner General of Inland Revenue, counsel Dinesh Perera informed the court that the Inland Revenue Department had filed five separate cases against the company’s directors to recover outstanding tax liabilities.

He further stated that a separate case relating to the alleged non-payment of taxes for the 2019–2020 tax years is currently being heard before the Court of Appeal.

Counsel therefore requested the court to order the defendants to continue paying the outstanding taxes in accordance with the existing arrangements.

The Magistrate also directed the Inland Revenue Department to submit a progress report on the investigation to the court on 30 September.

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