- Probe on failure to recover billions in dues
- COPA recommendations to be implemented
Committee members State Ministers Dayasiri Jayasekara, Shehan Semasinghe, and Prasanna Ranaweera, and Members of Parliament (MPs) Tissa Attanayake, Ashoka Abeysinghe, Gunapala Ratnasekera, Weerasumana Weerasinghe, Professor Ranjith Bandara, Niroshan Perera, Gamini Waleboda, S. Shritharan, Professor Harini Amarasuriya, and Upul Galappaththi along with other committee members, Director General of the Sri Lanka Customs and its high-ranking officials, Officials of the Ministry of Finance, and officials of the Auditor General's Department marked their presence at the COPA meeting held on 3 December in this regard.
The losses were revealed via an audit conducted by the Auditor General's Department, which stated that the loss of money was a result of the negligence on the part of Sri Lanka Customs officials, who failed to clear specific goods under the Harmonised System (HS Code) within the relevant framework.
It was also revealed that Treasury and Ministry of Finance Secretary S.R. Attygalle had taken measures to investigate the matter and recover the losses incurred by the Government due to these companies. However, the COPA too directed Sri Lanka Customs to take immediate action in this regard, to which Sri Lanka Customs Director General Maj. Gen. (Retd.) Vijitha Ravipriya agreed.
It was also revealed that the failure to implement an adequate internal control system within Sri Lanka Customs pertaining to the process of imports and exports had resulted in the release of six containers of perfume belonging to an importer worth Rs. 39,335,091, on six instances, based in claims it was western medication, leading to a loss of Rs. 40,761,600 to the Government. Additionally, the failure to administer adequate punishment to the officials involved in the act of fraud was revealed at the committee.
Internal delays in processing queries
When contacted by The Sunday Morning, Customs Director General Maj. Gen. (Retd.) Ravipriya said: “Sri Lanka Customs will support the investigations and act according to the recommendations and the instructions given by COPA last week.”
He said the audit queries that were conducted since 2013 have been taken into consideration by COPA and it is clear that there was some oversight in taking action pertaining to the incidents highlighted by the Auditor General’s Department.
The Director General, however, noted that according to his knowledge, nobody had purposely delayed taking action, and Sri Lanka Customs conducts a number of queries and handles a number of ongoing cases.
The cases are dragging on and Sri Lanka Customs will look to expedite them, he said. Action had already been taken to recover the due amounts, whilst the delay as a result of cases being dragged has been identified, he added.
“COPA has taken into consideration only several issues and it has sent the instructions, recommendations, and considerations that should be done by Sri Lanka Customs last week following the meeting, and we will take necessary steps accordingly,” he stated.
“Nobody has purposely delayed these, but the cases are being dragged – which should not happen. We are trying to sort it out and recover as much as we can.
“There are a lot of unresolved queries; we will not target a name, company, or a person. We are going to sort out whatever cases are pending.
“The COPA did not discuss with us all the queries they raised in the report they sent to us a few days ago where they requested that various actions be taken. We will act according to those actions and expedite the pending cases,” he added.
Palm oil levy a factor?
Nevertheless, earlier this year, the Government increased the Special Commodity Levy on palm oil by Rs. 100 with effect from 10 April. Accordingly, the document sent by Prime Minister Mahinda Rajapaksa, in his capacity as Minister of Finance, Economic and Policy Development, to Sri Lanka Customs showed that the tax hike would be in effect for three months.
Accordingly, the levy on the final product of palm oil, which stood at Rs. 200, was increased to Rs. 300, while the levy imposed on its intermediate and raw products were also increased proportionately.
According to the Fiscal Management Report 2020-21 issued under the Fiscal Management (Responsibility) Act No. 3 of 2003, consisting of the Fiscal Strategy Statement – 2021 (in compliance with Sections 4, 5, and 6) and the Budget, Economic, and Fiscal Position Report – 2021 (in compliance with Sections 7, 8, and 9) by Minister of Finance Mahinda Rajapaksa in November, the imports of coconut oil increased significantly to 30,575 metric tonnes in the first eight months of 2020, a benefit as a result of the revision of the Special Commodity Levy (SCL) on coconut oil, virgin coconut oil, and palm oil imports.
At present, the Government levies a tax of Rs. 350 per kg of palm oil and a tax of Rs. 125 for coconut oil.
Rs. 2.3 b outstanding in taxes
Parliament’s Committee on Public Accounts (COPA) uncovered that the Excise Department has an outstanding Rs. 2.3 billion in tax revenue that is pending collection over the past five years, The Sunday Morning learnt.
The COPA uncovered that Rs. 2,376.2 million in outstanding revenue is yet to be collected by the Excise Department as at December 2019.
The total amount of tax arrears due to the Excise Department over more than five years is Rs. 479.9 million as at 31 December 2019, whilst delay charges alone amount to Rs. 1,896.3 million, the Parliament’s Office stated.
Meanwhile, COPA Chairman Professor Tissa Vitharana instructed the department to take immediate action to recover the amounts owed, whilst excise officials said legal measures are being taken to recover the funds.
When contacted by The Sunday Morning, Deputy Commissioner of Excise Kapila Kumarasinghe said that 20% of the total amount is the tax component payable by the companies that defaulted, and the rest is the accumulated penalty charge on the same.
So far, legal action has been taken against two companies, he added.
According to law, excise tax should be paid within 15 days. Meanwhile, in the case of a default, a penalty charge of 3% is added, which is how the total outstanding amount had accumulated over the years, he explained.
Furthermore, the Deputy Commissioner stressed that every year, the department provides a total of around Rs. 120 billion to the Treasury, stating that therefore, compared to the overall income of the department, the dues pending collection were less.