Decision to collect Rs 39.06 billion capital gains tax from Ncell stayed
Kathmandu, April 25
The Supreme Court today issued temporary stay order against Large Taxpayers Office’s decision to levy Rs 39.06 billion capital gains tax from Ncell Pvt Ltd, a private sector telecommunication service provider.
A single bench of Justice Bam Kumar Shrestha told defendants not to collect CGT from Ncell till May 6 when the SC, after hearing arguments from both parties, will decide whether or not to continue the stay order against LTO’s decision. The apex court also issued show cause notice to the defendants. The SC 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 the SC decided on February 6 that the liability to pay CGT on Rs 143 billion buyout deal between TeliaSonera and Axiata Investment UK Limited Company rested with Ncell.
The Ncell move came on the last day of the seven-day deadline set by LTO for Ncell to deposit CGT.
The Department of Inland Revenue had initially decided that TeliaSonera needed to pay Rs 60 billion CGT, but once the SC ruled that the CGT liability rested with Ncell, the DRI, after deducting 15 per cent CGT (21.54 billion) paid in advance by Ncell, in addition to Rs 2 billion as late fee, decided that Ncell needed to pay Rs 39.06 billion more. LTO sent a letter to Ncell on April 16 telling it to pay a revised CGT of Rs 39.06 billion.
Ncell argued that LTO had violated due process while reassessing its tax liability, as it did not give Ncell a chance to present its argument as provisioned in the Income Tax Act.
Ncell further argued that LTO had no power to levy tax on Ncell for the period preceding February 6, the day the SC decided that CGT liability rested with Ncell and not TeliaSonera.
Ncell also argued that the SC, in its February 6 decision, did not order Ncell to pay any fees or interests.
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