Evasion of Rs.5.5Bn tax revenue to government: Excise suspends production licence of W. M. Mendis and Co.

• W. M. Mendis and Company’s writ petition dismissed by Appeal Court
• Further legal action is to be determined depending on the non-payment of tax arrears of the company in future

By Kurulu Koojana Kariyakarawana and Lakmal Sooriyagoda

Despite several warnings issued over a span of one year, which were not being adhered to, the Department of Excise yesterday suspended the production licence of local liquor giant W. M. Mendis and Co. Limited for evading tax arrears of Rs.5.5 billion to the government, the Daily Mirror learns.

Commissioner General of Excise U. D. N. Jayaweera issued orders to suspend the production licence of W. M. Mendis and Co. Limited following a writ petition filed by the latter challenging the Excise Department was dismissed by the Court of Appeal.

A senior departmental official told the Daily Mirror yesterday that the license has not been cancelled yet but suspended until the arrears are settled by the liquor company. However, further legal action is to be determined depending on the non-payment of tax arrears of the company in future. 

A writ petition filed by W. M. Mendis & Co. Limited, challenging the legality of a letter issued by the Excise Department insisting on the suspension of its licence if arrears are not paid by the 30th of last month, was yesterday dismissed by the Court of Appeal.

The two-judge bench of the Court of Appeal, comprising Justices Sobhitha Rajakaruna and Mahen Gopallawa, decided to dismiss the petition, citing that there is no prima facie case to proceed with the application.President’s Counsel Naveen Marapana, appearing for the petitioner, informed the court that the Excise Department had arbitrarily issued the letter, warning of the licence suspension if the arrears are not paid by the specified deadline.

He informed the court that his client had been notified that eight out of ten liquor manufacturing licences issued to his client were to be suspended by yesterday. Deputy Solicitor General Awanthi Perera, appearing for the Attorney General, informed the court that the government has taken a policy decision to cancel the licences of liquor manufacturing companies that default on tax payments. She further stated that this policy would apply to all companies defaulting on tax payments. Three Directors of W. M. Mendis and Company Ltd. - Arjun Aloysius, A. R. Dinendra John and Prasanna Kumarasiri de Silva were recently sentenced to a six-month jail term by the Colombo Chief Magistrate’s Court for defaulting on the payment of Value Added Tax (VAT) amounting to Rs.3.5 billion.