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VAT being levied as penalty causes Rs 125 million loss to govt

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By Saman Indrajith

The government suffered a loss of Rs 125.5 million owing to a mistake committed in levying taxes on coal imported for the Norochcholai Thermal Power Plant, says the Second Report of the Committee on Public Accounts presented to parliament on Wednesday by Committee’s Chairman Prof. Tissa Vitarana.

The report says: It was observed that, Sri Lanka Customs has conducted a customs investigation and Rs. 205 million of penalty had been imposed and recovered regarding under payment of Rs.187, 068,787/- in respect of under calculated and paid value added tax (VAT) due to non-calculation of transport and other costs in importing the coal required for the Norochcholai Thermal Power Plant by Lanka Coal Company (PVT) Ltd., as per the provisions of Gazette Notification No.1994/18 dated 23 November 2016.

“The Committee observed that only Rs. 61.5 million was credited to the Government Revenue and as a result the Government lost Rs. 125.5 million due to the fact that VAT has been levied as a penalty instead of being levied as an additional tax, 50% of the fine levied amounting to Rs. 102.5 million has been given as rewards to the officers and 20% amounting to Rs. 41 million has also been credited to the officers’ welfare Management and Compensation Fund.”

The Committee has observed that the Inland Revenue Department, one of the three major contributors to nearly 90% of government revenue, has a large unresolved tax arrears and the government incurs a huge loss due to the delay in settling the arrears.

“Out of the computer programs of the Inland Revenue Department in this regard, the amount of tax in arrears pertaining to the institutions identified with respect to the Legacy system as at 30 March 2021 is Rs. 18 billion. Out of this amount, only Rs. 424 million has been recovered in cash. The amount of Rs.10 billion had been settled in the form of suspensions, tax and penalty deductions, penalty cuts, journal transfers and tax refunds.

However, it was revealed that, the Special Unit set up to settle the tax in arrears related to the Legacy system has settled a large amount of tax and the outstanding tax balance of this unit as at 31.03.2021 is Rs.79 billion only,” says the report.

It says: “According to the RAMIS (Revenue Administration Management Information System) system, the tax in arrears on that day was Rs. 87 billion. Of this amount, only Rs 4 billion had been recovered in cash. The amount of Rs. 60 billion was settled in the form of suspensions, tax and penalty deductions, penalty cuts, journal transfers and tax refunds. The Committee drew its attention to the fact that taxes classified under the category of ‘Recoverable Taxes’ were not in a position to be collected without any actual problems and the Committee observed that an overestimation of the taxes that could be levied due to this does not indicate the true situation.”

Presenting the report to the House, its chairman Prof Vitarana said that the committee had probed accounts of 16 public institutions and he was shocked to see the findings of some investigations.

The committee has observed that there was a loss of ability to reduce the road accidents by half due to the shortcomings of the technical equipment required to the Police who play a significant role in road safety and the necessity to transform the National Council on Road Safety into a National Commission.

“It costs between Rs. 1 million and Rs. 10 million to treat a person subject to a road accident and it was revealed before the Committee that a National Council for Road Safety consisting of representatives from 17 Governmental and Non-Governmental Organizations have been appointed to work on establishing a safe road network for all. The Committee emphasized that there is an urgent need to transform this National Assembly into a Commission.

The Committee also stressed that the Sri Lanka Police was found to be lacking in technical equipment to prevent road accidents and that the relevant parties should take immediate action in this regard and provide the necessary items as soon as possible.”



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Fast Attack Craft P 4447 recovered in successful salvage operation

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The Sri Lanka Navy successfully recovered its Fast Attack Craft P 4447 following a successful salvage operation, bringing a multi-stage emergency response to a close.

The craft, which ran into distress during a routine patrol on 15th August 2026 off Angulana, was brought to the surface on 11th September, from a depth of approximately 80 feet. It was
subsequently towed to the Colombo Dockyard premises.
The initial phase of the operation immediately following the incident focused on search and rescue. A joint effort involving the Navy, Air Force, Police, and local fishermen from Angulana
resulted in the rescue of 11 crew members. The search and rescue phase drew to a close with the recovery of the remains of the Second in Command of the craft, on 4th September.

Following the search and rescue phase, specialized Navy diving and salvage teams launched a dedicated recovery phase against rough sea conditions and underwater challenges, adhering to
strict safety protocols. The Navy’s marine, hull, electrical, and electronic engineering teams utilized specialized technical know-how and equipment to raise the vessel in stages.

Thus, the salvage operation marked an outstanding achievement attained through the professionalism, technical expertise of Navy divers, and coordinated contribution of all
engineering and technical branches of the Sri Lanka Navy. Technical support and specialized expertise were also extended by the Sri Lanka Ports Authority and Colombo Dockyard PLC.

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CIABOC member’s appointment: Controversy over Speaker under probe heading selection process

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By Shamindra Ferdinando

The Opposition should intensity its focus on the forthcoming selection of a member of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and remain vigilant as Speaker Dr. Jagath Wickremaratne, MP, the head of the Constitutional Council (CC) tasked with making the relevant recommendation, is under investigation by the CIABOC, sources familiar with the ongoing inquiry told The Island.

Chethiya Goonasekara, PC, is expected to complete his three-year term on Dec 31, 2026. Sources pointed out that CIABOC Commissioners are appointed by the President on the recommendation made by the 10-member Constitutional Council.

The CIABOC initiated the investigation following a complaint lodged by suspended Chief of Staff and Deputy Secretary General of Parliament Chaminda Kularatne in early February this year. Sources said that as Goonasekera is scheduled to complete his term toward the end of 2026, the CC would have to call applications soon to choose the successor.

Goonasekara received his appointment from President Ranil Wickremesinghe in January 2024. A Justice W. M. N. P. Iddawala was appointed Chairman of the CIABOC. The other commissioner is K. Bernard Rajapakse.

Asked whether Iddawala and Rajapakse, too, would complete their terms soon, sources said that in terms of the Anti-Corruption Act No 09 of 2023, the Chairman of CIABOC would hold office for a period of five years, second commissioner (K. Bernard Rajapakse) for four years and the third commissioner (Chethiya Goonasekara) for a period of three years.

Sources said that the Opposition as well as civil society representatives in the CC should take up the issue of Speaker facing an investigation by the CIABOC taking part in the forthcoming selection process. Responding to queries, sources emphasized that the issue was whether in terms of Section 107 of the Anti-Corruption Act the participation of the Speaker in the selection process amounted to a violation of the Act itself.

The current members of the CC are Dr Jagath Wickramaratne, Speaker and Chairman of the Constitutional Council, Dr. Harini Amarasuriya, Prime Minister, Sajith Premadasa, Leader of the Opposition, Bimal Rathnayake, MP, Aboobucker Athambawa, MP, Ajith P. Perera, MP, Sivagnanam Shritharan, MP, Austin Fernando, Civil society representative, Prof. Wasantha Seneviratne, Civil society representative and Ranjith Ariyaratne, Civil society representative.

Sources pointed out that in spite of the sensitivity of the case, the CIABOC recorded Kularatne’s statement in the second week of August, six months after he lodged the complaint.

The CIABOC on 3, 8 and 10 Sept recorded the statements from the Transport Officer, Deputy Director, Administration and Assistant Director, Finance regarding the use of facilities by the Speaker, those assigned to his staff and other relevant matters.

The NPP named Dr. Wickramaratne as the Speaker after Asoka Ranwala resigned over controversy regarding his higher education qualifications.

SJB lawmaker Dayasiri Jayaskera has repeatedly raised the issues concerning the Speaker with the focus also on the Speaker using two government-managed residences, relevant staff in addition to expenditure on food, transport and fuel provided to the Speaker’s private secretary.

Political sources said that trouble erupted after the Parliamentary Staff Advisory Council in late January sacked Kularatne accusing him of providing false information to secure his appointment. Before being appointed as the Deputy Secretary-General of Parliament in 2023, Kularatne held several high-ranking positions, including Secretary to the Chief Government Whip, Additional Secretary to the President, Additional Secretary to the Prime Minister, and Additional Secretary to the Leader of the Opposition.

The SJB declared in Parliament that Ranwala should be brought back as the Speaker as they have no faith in Wickramaratne. MP Mujibur Rahuman jokingly told parliament that the Opposition wouldn’t raise Ranwala’s educational qualifications.

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GMOA: Countrywide cadre revision not done since 2015

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Dhammika

The Government Medical Officers’ Association (GMOA) has stressed the need to conduct a comprehensive countrywide cadre revision urgently.

GMOA spokesman Dr. Lasitha Dhammika told The Island that the failure on the part of successive governments to conduct cadre revision caused the deterioration of the public sector health services. Due to the absence of required statistics, they hadn’t been able to fully comprehend the situation on the ground and to ascertain the requirements of the public.

Dr. Dhammika pointed out the expansion of the services without supporting statistics and the need to initiate an immediate cadre revision. According to him, the GMOA had raised this issue with successive governments without success. The GMOA spokesman said that they also sought relevant information from the Health Ministry in terms of the Right to Information (RTI) Act two weeks ago but was yet to receive response.

(SF)

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