January 28th, 2022, Colombo, Sri Lanka: On the 27th of January 2022, the Executive Director of the Centre for Policy Alternatives, Dr. Paikiasothy Saravanamuttu, filed a Petition in the Supreme Court (SC SD 08/2022) challenging the proposed Special Goods and Services Tax Bill, which was published in the Gazette of the Democratic Socialist Republic of Sri Lanka of 7th January 2022, and placed on the Order Paper of Parliament on 20th January 2022. The Bill seeks to provide for the introduction of a special goods and services tax which will operate in lieu of several other existing taxes, levies etc., and for the collection and administration of the same.
It is argued that several clauses in the instant Bill are inconsistent with the Constitution, including several entrench provisions, and thus cannot be passed into law except if approved by the people at a referendum in addition to a two-thirds vote of the whole number of the Members of Parliament in favour as required by Article 83(a) of the Constitution.
The Petition challenges clauses 2, 3 and 9(1) of the Bill. Clause 9(1) provides that the Special Goods and Services Tax, imposed under section 2, and payable by a taxable person shall be paid directly by the respective taxable person, by way of an electronic fund transfer to an account opened and maintained in the name of the Designated Officer for the purposes of this Act, and such payment shall be deemed to be a credit to the Consolidated Fund.
This is a deviation from the usual process by which monies collected by way of taxes are ordinarily credited or remitted to the Consolidated fund. The Petition argues that this deviation could result in a dilution of the control Parliament has over Public Finance, which is important to ensure that public money is utilized in trust for the public. The Petition notes that a dilution of parliamentary oversight could result in corruption and a misuse of funds.