By S.S. Selvanayagam
President’s Counsel Sanjeeva Jayawardena this week forewarned the country’s Supreme Court of the creation of “other agents” outside the Inland Revenue Department’s (IRD) purview as tax officers by the new Inland Revenue Bill, which is set to repeal the existing Inland Revenue Act of 2006.
He raised doubts that such a move would open a passage for siphoning off of classified information of the taxpayers, threatening the secrecy of such sensitive information, which is only privy to the IRD.
According to Counsel Jayawardena, a class of persons in clause 100 (1) (a) of the bill called “other agents of the Department”, who are all creatures and functionaries unknown to any form of law and would effectively be ex-judicial both in form and function, would be intrinsically dangerous to be included in a fiscal statute, which demands clarity and high precision.
He stated that as a result of the new bill, there will be a serious undermining of authority and status of the IRD officials as the specialized and trained officers of the department as well as their capacity as public officers.
The concept of “other agents” introduced in the bill would make serious inroads to the powers, duties and functions of the IRD officials and make them effectively subservient to this so-called curious category of officials, he said.
Counsel Jayawardena with Lakmini Warusevitane made an oral submission on behalf of the five trade unions of the Inland Revenue Service, namely, the Inland Revenue Deputy Commissioners’ Association (also known as the Commissioner’s Association), Inland Revenue Staff Officers’ Association, Inland Revenue Executive Officers’ Union, Inland Revenue Service Union and Inland Revenue Employees’ General Union.
Counsel Jayawardena made his submission before a bench comprising Chief Justice Priyasath Dep, Justices Anil Gooneratne and Nalin Perera.
Further, he submitted that certain provisions of the bill, apart from being in violation with the certain provisions of the constitution, including the right to equality and equal protection before law guaranteed by Article 12(1), have strong potential to violate the concept of sovereignty, which is reposed in the people and is inalienable.
Although parliament has the legislative power of the people and if a law has the effect of violating or being inconsistent with the power of sovereignty, in such an instance, the people themselves who are the repositories of such powers, by their collective dispensation, through a referendum, permit such inconsistency and no other organ of the state has any authority in law to exercise such power, he stated.
He further submitted that although the present Inland Revenue Act of 2006 is now being sought to be repealed by this new bill, the present act expressly provides that the Commissioner General of Inland Revenue will mean and include Senior Deputy Commissioner General, a Deputy Commissioner General, a Senior Commissioner and a Commissioner, who is specially authorized by the Commissioner General.
However, no such provision has been made in the new bill.
He stated that in the present law there are numerous sections, which by statute allocate specific persons to certain specific posts in the department and thereby granting these posts and their holders’ specific powers and functions, while in the new bill there is a complete omission of that.
The new bill seeks to introduce a new class so-called “tax officials”, who can perform or discharge powers, duties and functions assigned by the Commissioner General or delegated to them and very disturbingly such tax officials can by the definitions contained in the new bill, not only be individuals but also entities including a body of persons, corporate or incorporate and most alarmingly even a non-governmental organisation.
Such persons, according to the bill, can be either appointed or employed or engaged in any capacity whatsoever, which means that only are such persons not designated officers of the IRD and could be private companies or non-governmental organisations (NGOs) but also would not be appointed by the Public Service Commission (PSC) or be accountable by way of fundamental rights (FR) or under the PSC or under the financial regulations and other rules and regulations governing the public officers, he said.
He said they will hold their dubious office at the pleasure of the Finance Minister and the Commissioner General would be necessarily be pliant to political and other collateral agendas and would succumb to the pressures that the public officers would generally be able to resist in terms of the law.
He also submitted that the previous finance minister had attempted a similar move with regards to the Excise Department, where the minister tried to form a unit exercising the power of the Excise officers, who function outside the purview of the Excise Department and report to the Finance Ministry and not the Commissioner General of Excise.
This too became the subject matter of an FR application and as a result of which all the functions were brought strictly within the Excise Department in terms of the law.
Counsel Jayawardena further stated that under the new bill, the minister with the IRD Commissioner General can specify additional classes of persons, who would be required to register under the new bill.
He said this would make such persons liable to furnish returns of income without first determining whether they are chargeable with income tax in terms of the principal charging section, being section
He further stated that although they welcome and acknowledge the need to widen the tax net and collect greater tax revenue, such have to be effected within the mandates of the law.
He also said that there is no justification for granting extensive tax reliefs to so-called NGOs without checking the effectiveness and legitimacy of such institutions.