Issue bills, not ‘challans’: Taxman to Fire And Ice

Kathmandu, March 31

The Inland Revenue Department has rebuked Fire And Ice’s practice of issuing so-called ‘challans’ to customers who ask for bills, calling it a deliberate attempt to hoodwink consumers as well as the taxman.

Fire And Ice, a restaurant based in Thamel, was recently found imposing taxes on customers via invoices that did not mention seller’s name and permanent account number. This irregularity prompted the Inland Revenue Office, Thamel, to impose a fine of Rs 5,000 on the restaurant. At the time of collecting the fine, the office had warned the eatery not to repeat the mistake, said Tanka Nath Lamsal, head of the tax office.

These issues were recently reported by The Himalayan Times. But even after being found guilty of breaching the tax code, eatery director, AnnaMaria Forgione, today wrote an article in a newspaper, defending the restaurant’s action, which has been declared “illegal” by the taxman.

In the article Forgione states, “In order to ensure customers are billed correctly, businesses such as Fire And Ice are opting to offer a challan with a note that says ‘Please confirm the menu items served’ so that customers can double check their order to make sure it is correct. Only after the billing information is confirmed are customers provided a proper bill.” First of all, the government tells businesses what to do on issues related to taxation, not the other way around, said IRD Director Rishi Ram Pokhrel, who looks into cases of value added tax. So, statements like ‘we are opting to offer challan’ are “inappropriate”, according to Pokhrel.

He said, “When customers ask for bills after eating, restaurants should give them bills, not challans. And when taxes are added, proper tax invoices should be given, not challans.”

Challans, according to Pokhrel, are commonly provided when goods are transported from one place to the other, pending issuance of proper invoices upon delivery of goods. “Restaurants cannot provide challans to customers,” said Pokhrel. “This is totally wrong.”

The Himalayan Times had found that Fire And Ice was issuing bills with 10 per cent service charge and 13 per cent value added tax without mentioning seller’s name and permanent account number. Service charge is distributed among employees and employers of restaurants. But VAT goes to the state coffers. So people who were issued

those bills perhaps never knew whether tax collected from them was deposited in the government’s account because those invoices did not have seller’s identification.

This is the reason why the IRD has designed templates of invoices for VAT-compliant businesses. The tax invoices must contain bill number, permanent account number, sellers’ and buyers’ names, breakdown of taxes and taxable amount. Sellers can also issue “abbreviated tax invoices”, which allow sellers to issue bills without mentioning taxes that have been levied. But such invoices should also include seller’s name and permanent account number.

“If the bill inclusive of VAT does not contain these details, the seller will be fined,” IRD Director General Bishnu Prasad Nepal had earlier told THT. The taxman can fine sellers anywhere between Rs 1,000 and Rs 20,000 for each offence related to VAT evasion. In the article, Forgione hasn’t mentioned that her restaurant was recently fined by the taxman. Instead, she has tried to defend her restaurant’s action by stating Fire And Ice has been utilising the computerised billing system introduced by the IRD “for nine months” to “increase efficiency and transparency on all transactions”. “Use of computerised billing system does not grant one permission to issue inappropriate bills,” said Pokhrel. “Proper bills must be issued at all times.”