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COPA baffled by massive rewards for Customs at the expense of Treasury

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Question mark over Tax Appeals Commission

70% of fine on Lanka Coal ends up with officers

By Shamindra Ferdinando

The cash-strapped government hasn’t been able to recover tax revenue running into billions of rupees, in spite of sporadic interventions made by the Parliamentary Watchdog, the Committee on Public Accounts (COPA).

 According to a report submitted to Parliament on July 20 by COPA, the situation has been further complicated by the Customs receiving substantial amounts, as rewards, from fines imposed on tax defaulters, at the expense of the Treasury.

 Prof. Tissa Vitarana, in his capacity as the Chairperson of the 22-member COPA, has submitted the report.

 The COPA has questioned the Customs why prominent palm oil importers Pyramid Wilma Pvt Ltd and Naratha Agro Industries (Pvt) Ltd. were allowed to appeal in 2019 against the Attorney General’s decision that loss of revenue suffered by the Treasury to the tune of Rs 6.130 bn during 2013-2016 period should be charged from 2013 instead of 2016 as recommended by a committee that inquired into the irregularities.

Pointing out that the Tax Appeals Commission couldn’t accept appeals made after the stipulated 3 month period following a particular decision, COPA has instructed Director General of Customs, Maj. Gen (retd) Vijitha Ravipriya to inform the Tax Appeal Commission. DG, Customs has done so on Feb 2, 2021, COPA according a copy of the report made available to The Island.

 Tax Appeals Commission has been established in terms of Tax Appeals Commission Act No 23 of 2011 (subsequently amended).

 COPA has also dealt with an unprecedented case of Sri Lanka Ports Authority (SLPA) and Customs being involved in a costly case wherein the latter was seeking 50 percent of a fine imposed on SLPA as a reward for those involved in the inquiry. According to COPA proceedings, the SLPA had been blamed for defaulting on the payment of Rs 916,526 over the import of gantry cranes and other equipment worth Rs 11,498,829,084 way back in 2011.

 In spite of talks involving stakeholders, including the Treasury as well as the House watchdog over the years, the issue hadn’t been resolved as both parties spent quiet a lot on lawyers.

 Customs have sought a staggering 50 percent as a reward for officers from the fine imposed on the SLPA. The Consultative Committee on ports and shipping has inquired into the possibility of the Treasury taking the entire sum.

 COPA has questioned the rationale in one government institution receiving cash reward at the expense of another as it caused quite a problem. According to the COPA report made available to The Island, the watchdog has requested Chief Accounting Officer/Accounting Officer to send all relevant reports and documents to parliament before the Customs appeared before Prof. Vitharana’s outfit in two months.

 Prof. Tissa Vitharana told The Island that remedial measures should be taken to improve the revenue collection process. Appreciating the services rendered by members of his committee, the political veteran said that the need to enhance state revenue couldn’t be ignored. The LSSPer noted that the government income had now fallen very much less than 10 percent of the GDP, a situation all should be seriously concerned about.

 COPA has examined the legal wrangle involving the Customs and the SLPA against the backdrop of Customs officers receiving half of Rs 205 mn imposed on Lanka Coal Company (Pvt) Ltd as rewards due to the payment being categorized as a fine instead of an additional tax. The company in question has been formed by CEB (60%), Treasury (20%), Ceylon Shipping Corporation (10%) and SLPA (10%). COPA pointed out that in addition to taking 50 % of the so called fine, Customs had secured a further 20% (Rs 41 mn) for their welfare and management fund leaving Rs 61.5 for the Treasury.

 COPA has underscored the need to amend relevant laws to prevent recurrence of such irregularities.

 COPA has revealed a spate of instances wherein due to range of factors, including raging Covid-19 epidemic had been blamed on the inordinate delay in settling a substantial number of tax appeals. The tax and penalties pertaining to 1,108 appeals amounted to a staggering Rs 18,684,603,316 whereas only 49 were finalized.

 

 



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Construction of Jet A-1 Aviation fuel pipeline and new oil tank complex at Muthurajawela begins under President’s patronage

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President Anura Kumara Dissanayake said that the Government’s objective is to maintain a strong state presence in the energy market while providing an efficient service to the people, adding that significant progress has been achieved towards this objective over the past two years and that a strong energy market that does not place a burden on the people is now being built in Sri Lanka.

The President made these remarks on Friday (02) morning  while attending the commencement of construction of the Jet A-1 pipeline system of the Ceylon Petroleum Corporation (CPC) and two new oil storage tank systems belonging to the CPC and the Ceylon Petroleum Storage Terminal Limited (CPSTL).

The projects are being implemented in line with the Government’s national objective of developing infrastructure in the energy sector, with the aim of ensuring the security of aviation fuel supplies, reducing supply costs and providing the capacity required to meet future demand for aviation fuel.

A dedicated pipeline and associated tank complex are being constructed to connect Muthurajawela with the Bandaranaike International Airport in Katunayake, with the aim of meeting the future demand of the country’s aviation sector, ensuring the security of aviation fuel supplies and reducing transportation costs.

Construction has commenced on five new Jet A-1 fuel storage tanks with a total capacity of 92,000 cubic metres. These comprise two large Jet A-1 tanks, each with a capacity of 30,000 cubic metres; two medium-sized tanks, each with a capacity of 15,000 cubic metres; and an additional tank with a capacity of 2,000 cubic metres. The fuel supply pipeline system will be connected to the airport through a 21-kilometre-long underground pipeline with a diameter of 10 inches from the Muthurajawela tank complex. The project is scheduled for completion within 30 months.

Meanwhile, as part of ongoing efforts to strengthen and expand storage and infrastructure facilities in the petroleum industry, the Ceylon Petroleum Storage Terminal Limited (CPSTL) commenced construction today of three new storage tanks at the Muthurajawela Terminal.

Upon completion, the three-tank system, comprising two tanks with a capacity of 15,000 cubic metres each and one tank with a capacity of 10,000 cubic metres, will provide an additional total storage capacity of 40,000 cubic metres.

This will further enhance the petroleum storage capacity of the terminal and support the continued development of the country’s petroleum infrastructure. The project has a contractual period of 18 months and is scheduled for completion in April 2028.

The tanks are being constructed in compliance with relevant international standards and recognised industry best practices, ensuring enhanced safety, reliability and operational efficiency. The additional storage capacity will strengthen the country’s fuel reserves, improve operational flexibility and support the reliable and uninterrupted distribution of fuel products to meet the country’s growing energy requirements.

Minister of Ports and Civil Aviation and Minister of Energy Anura Karunathilaka said,

“We are now in an era of energy transition. The world is rapidly moving towards the use of clean energy. The use of electric vehicles is very important in this regard, and our country is also now moving in that direction.

The use of solar energy is also important. We expect to add 1,200 megawatts of solar power capacity to the national grid by 2029.

As a country, we must focus not only on controlling fuel prices but also on controlling fuel consumption. The public also has a major responsibility in this regard.

It is particularly important to change our patterns of energy consumption. Greater energy security can be achieved by avoiding periods of high energy demand, shifting towards electricity use and using fuel-efficient vehicles, particularly electric vehicles.”

Chairman of the Ceylon Petroleum Corporation D. J. Rajakaruna said,

“We faced a major challenge due to the war in the Middle East. However, with the intervention of the President, relief was provided to the people and the situation was managed very effectively.

As a result, while diesel prices in the global market increased by 91%, the increase in Sri Lanka was only around 39.5%. While petrol prices in the global market increased by 80%, the increase in Sri Lanka was only around 41%.

Despite providing fuel at lower prices in this manner, the Corporation has recorded a profit of Rs. 28 billion this year. We also recorded a profit of Rs. 36 billion last year.

This may raise the question of why fuel prices are not being reduced when there are such profits.

However, we have used those profits to commence a number of infrastructure development projects at the institution.

These include adding the capacity of 11 tanks, including the construction of six tanks that had previously been abandoned, to increase fuel storage capacity; modernising our oil-filling section, which is more than 90 years old, and establishing a gantry system similar to that at Muthurajawela; laying two new pipelines for unloading fuel from the port to Kolonnawa; constructing a new pipeline to transport Jet A-1 fuel to Katunayake; and upgrading the pipeline system and laying new pipelines, among many other projects.

We are implementing these projects using those profits. Therefore, we have returned the benefits to the people through these investments.”

The Minister of Science and Technology, Professor Chrishantha Abeysena; Deputy Minister of Energy, Arkam Ilyas; Member of Parliament Kumara Jayakody; Secretary to the Ministry of Energy and Senior Additional Secretary to the President, Russell Aponso; foreign ambassadors; government officials including officials of the Ministry of Energy and the Ceylon Petroleum Corporation; and representatives of Sinopec were among those present at the occasion.

President’s Media Division (PMD)

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Lanka enters new phase of prosecutions as hurdles clear

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MONETABRIEF –The prosecution of high-profile individuals from the former Rajapaksa administrations is set to escalate this month with the clearing of legal hurdles and administrative bottlenecks, according to officials involved in the process.

Former president Gotabaya Rajapaksa’s attempt to secure an order preventing his arrest in connection with the Easter Sunday massacre was turned down by the Court of Appeal on Thursday.

An overseas travel ban has been in operation against Rajapaksa since June, but the Criminal Investigations Department made no move to question him. He instead filed a writ application seeking an order preventing his possible arrest.

President of the Court of Appeal Rohantha Abeysuriya noted that the court would not interfere with the investigative process. Any attempt by the court would amount to an obstruction of the investigation.

In an unrelated case, the same court rejected an application by opposition legislator Dilith Jayaweera seeking the quashing of a contempt charge filed against him by the Fort magistrate. The charges against Jayaweera and a few other opposition politicians are expected to be taken up in the coming week.

Jayaweera and other opposition politicians — Wimal Weerawansa, Udaya Gammanpila, Sugeeshwara Bandara, and Asanka Navaratne

— were hauled up over their remarks relating to the arrest of Suresh Sallay, the former head of the State Intelligence Service.

SLPP academic Mahinda Pathirana is also charged over his public comments about Sallay’s arrest in February under the draconian Prevention of Terrorism Act.

Former president Mahinda Rajapaksa’s son, legislator Namal Rajapaksa, is already in remand custody following his arrest in connection with three cases of bribery and money laundering relating to the 2013 Airbus deal and the Krrish property development in Colombo.

Although Namal has been granted bail in the Airbus money laundering charge, he is in custody until October 13 over the bribery charge relating to the same Airbus transaction. His arrest is under a provision of the Anti-Corruption Act that does not allow a magistrate to grant bail unless under exceptional circumstances.

Meanwhile, his mother Shiranthi Rajapaksa, who had been asked to report to the Financial Crimes Investigations Division on September 24, was a no-show and was yet to return from Singapore.

She had travelled overseas on September 16, and a family spokesman said she was handed the FCID summons at the departure lounge of Bandaranaike International Airport just before she boarded a flight to Singapore.

At the time, the family spokesman said she was due to return in three days.

“We will see greater momentum in the legacy cases in the coming weeks,” an official involved in the prosecutions said.

“We have cleared the legal hurdles to press ahead with more arrests,” he said.

“We are working on a few administrative issues which will be resolved very soon.”

The controversial prosecution of former President Ranil Wickremesinghe is dragging on without him being formally indicted since his arrest in August last year. The Fort magistrate has listed the case again for November 11, when the Attorney-General is expected to report on his decision regarding action against Wickremesinghe.

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Police warn: Court evaders face property seizure

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Police have reminded the public that courts have the power to take legal action against individuals who evade arrest or remain in hiding after warrants have been issued against them.

Police said that under Section 60 of the Code of Criminal Procedure Act No. 15 of 1979, a court could issue a written proclamation requiring a person evading arrest under a warrant to appear at a specified place and time.

The proclamation must allow the person at least 30 days to appear before court, Police said.

If the person fails to appear even after the proclamation has been issued, the court may take further action under Section 61 of the Act.

This includes issuing an order for the attachment of the movable or immovable property belonging to the person concerned.Police issued the reminder highlighting the legal measures available against persons who deliberately evade arrest and remain in hiding after warrants have been issued.

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