KATHMANDU, July 30

The Revenue Tribunal of Kathmandu has allowed many taxpayers involved in value-added tax scam to walk free by paying a fraction (just 25 per cent) of the penalty amount fixed by various tax offices.

The tribunal, a quasi-judicial body that looks into tax-related appeals, recently settled 353 of 529 cases related to VAT scam. These cases — related to submission of fake VAT bills and mismatch in VAT declaration at various stages of business transaction — were filed around two years ago.

According to Kumar Chudal, chairman of the Revenue Tribunal, Kathmandu, around 80 per cent of 353 cases were settled by waiving 75 per cent of the penalty amount. These firms now have to submit principal amount, interest amount and only 25 per cent of the fine to walk free.

The VAT Act, however, says 100 per cent of the fine must be collected from those found guilty of producing fake bills and those involved in cases of mismatch.

The infamous VAT scam, which is said to have caused a revenue loss of around Rs 10.6 billion to the state, initially surfaced in 2012-13.

At that time, the Inland Revenue Department had found that 518 cases were related to fake VAT bills and another 495 cases were related to VAT mismatch. Based on

the findings of the IRD and their own investigations, respective tax offices then slapped fine of 100 per cent of the principal amount on these taxpayers.

But majority of the taxpayers were unhappy with the ruling of tax offices. They knocked on the doors of revenue tribunals located in Kathmandu, Pokhara, Nepalgunj and Biratnagar, albeit very few cases were filed at tribunals located outside capital.

“Revenue Tribunal, Kathmandu, has taken three different approaches while settling cases related to VAT scam,” said Chudal, adding, “Some of those found guilty by the IRD have been given clean chits. In

some cases, we have upheld the decision taken by tax offices. But in majority of the cases, we have waived 75 per cent of the fine amount imposed by tax offices.”

As the tribunal has settled majority of the cases related to the VAT scam, the IRD and tax offices under it are all set to take the issue to the Supreme Court.

“We will ask respective tax offices to move the apex court so that wrong precedence is not set,” said IRD Director General Chudamani Sharma. However, the tax offices need not take the consent of the IRD before knocking on the doors of the Supreme Court.