Constitutionality of Special Goods and Services Tax challenged in court

By Lakmal Sooriyagoda
The Inland Revenue Commissioners Association yesterday filed a Special Determination petition in the Supreme Court, challenging the constitutionality of the bill titled Special Goods and Services Tax.

The petitioners are seeking a declaration that the bill requires the approval by the people at a referendum, in addition to the two-thirds approval of Parliament. 
The bill titled Special Goods and Services Tax was placed on the Order Paper of Parliament on January 20, 2022.

According to the petitioners, the long title of the bill is “to provide for the imposition of a special goods and services tax, in lieu of the sums chargeable on such specified goods and services by way of tax, duty, levy, cess or any other charge imposed by law; to promote self-compliance in the payment of taxes in order to ensure greater efficiency in relation to the collection and administration on such taxes by avoiding the complexities associated with the application and administration of a multiple tax regime on specified goods and services and to provide for matters connected therewith or incidental thereto”.

The petitioners state that Clause 2(3) of the bill, if enacted, would allow the minister by an Order to determine the rate of tax applicable or the basis of the calculation of the Special Goods and Services Tax in relation to the specified goods and services, without the approval of Parliament.
The petitioners also state that Clause 2(3) of the bill amounts to an alienation of the legislative power of Parliament and it is inconsistent with Article 76(1) of the Constitution.

The petitioners further state that Clause 2(3) is inconsistent with Article 12(1) of the Constitution, as the clause confers unfettered discretion on the minister to arbitrarily determine the rates and basis of calculation of tax, without the approval of Parliament.

They also state that Clause 2(3) is inconsistent with Articles 3, 4(a) and 4(d) of the Constitution. Article 3 includes sovereignty, powers of government, fundamental rights and franchise. The removal of legislative parliamentary control over public finance derides the sovereignty of the people, as guaranteed by Article 3 read with Article 4 of the Constitution.
This petition had been filed through Attorney-at-Law Manjula Balasuriya, in terms of Article 121 of the Constitution read with Article 120, the constitutional jurisdiction of the Supreme Court.