The liquor manufacturing license issued to W. M. Mendis and Co. Limited is suspended as of today (5) due to the company’s failure to pay Rs. 5.7 billion in excise taxes and surcharges, the Excise Department said.

The department further stated that continued tax evasion may result in the suspension of the other licenses issued to the company, after December 31.

This decision follows the Court of Appeal’s dismissal of a petition filed by the W. M. Mendis and Co. Limited yesterday (4).

W. M. Mendis Distilleries had filed the petition seeking an order invalidating the letter issued by the Department of Excise informing that steps will be taken to suspend the excise licenses issued to the company if the outstanding excise duties were not settled before 30 November.

This order was issued by the Appeals Court judge bench consisting of Justices Sobhitha Rajakaruna and Mahen Gopallawa following an extended consideration of facts, declaring that the petition does not reveal any prima facie case.

Appearing for the petitioner during the trial, President’s Counsel Naveen Marapana stated before the court that the letter issued by the Excise Department to his client mentioning that steps would be taken to suspend the currently issued liquor production licenses if the tax arrears were not paid before 30 November, was completely unlawful.

The President’s Counsel further pointed out that it is an arbitrary act to suddenly announce that the license will be suspended on 30 November, when the company has already secured licenses to carry out production activities until 31 December.

He also stated that the Excise Department has informed his client that eight out of 10 liquor production licenses that have been issued to the company will be suspended from yesterday (4).

Additionally, the President’s Counsel stated that the outstanding excise duty of Rs. 5.3 billion owed by his client can be paid if the over Rs. 12 billion in assets currently frozen by the Central Bank of Sri Lanka, and which belongs to a sister company, Perpetual Treasuries is released.

Accordingly, President’s Counsel Naveen Marapana requested the court to issue an interim injunction to release the funds belonging to Perpetual Treasuries Company, which are being held by the Central Bank of Sri Lanka, allowing the payment of outstanding taxes of W. M. Mendis Distilleries.

Deputy Solicitor General Dr. Avanthi Perera who appeared on behalf of the Attorney General strongly opposed the President’s Counsel’s request, stating that the decision taken to suspend the licenses of liquor manufacturing companies that have defaulted on tax payments from 30 November is a policy decision of the government.

The Deputy Solicitor General further highlighted that the decision does not apply only to the petitioning company but applies to all liquor manufacturing companies that have defaulted on tax payments.

Accordingly, the Deputy Solicitor General requested the court to dismiss the petition without taking it into consideration.

After considering the facts presented by both parties, the judge bench ordered the relevant petition to be dismissed without taking it up for hearing.