Final hearing on Ncell’s CGT issue postponed to June 25

Kathmandu, June 4

The Supreme Court today put off the final hearing on capital gains tax (CGT) liability of Ncell until June 25, citing time constraint.

The full bench of the apex court was conducting the final hearing over the CGT dispute of Ncell, a private telecom service provider in Nepal. The SC had included the case in cause list, forming full bench of Justices Tej Bahadur KC, Purusottam Bhandari, Shushmalata Mathema and Manoj Kumar Sharma.

With the postponement of the final hearing, the apex court will issue its verdict on whether the Large Taxpayers’ Office (LTO)’s decision to levy CGT on Ncell was consistent with the existing law or not on June 25.

After around a dozen advocates pleaded on behalf of Ncell today, the full bench decided to conduct the next hearing after three weeks, that is, on June 25.

A single bench of Justice Bam Kumar Shrestha had issued an interim order against LTO’s decision to levy CGT on Ncell, while sending the case to the full court for final hearing today (June 4). Earlier, he had told the defendants not to collect CGT from Ncell till May 6 when the SC, after hearing arguments from both parties, was scheduled to decide whether or not to continue the stay order against LTO’s decision. The apex court had also issued show cause notice to the defendants.

The SC had passed the order in response to a case filed by Ncell on April 22, in which the private sector telecommunication service provider had argued that it owed LTO only Rs 14.5 billion and not Rs 39.06 billion as claimed by the government agency.

LTO decided to collect Rs 39.06 billion from Ncell after SC decided on February 6 the liability to pay CGT on Rs 143 billion buyout deal between TeliaSonera and Axiata Investment UK Ltd Co rested with Ncell. Ncell’s move came on the last day of the seven-day deadline set by LTO for the company to deposit the remaining CGT.

Department of Inland Revenue had initially decided Telia- Sonera needed to pay Rs 60 billion in CGT. But after the SC ruled that the CGT liability rested with Ncell, DIR — after deducting 15 per cent CGT (Rs 21.54 billion) paid in advance by Ncell, plus Rs two billion as late fee — decided that Ncell needed to pay Rs 39.06 billion more. LTO had sent a letter to Ncell on April 16 telling it to pay revised CGT of Rs 39.06 billion.