Ncell Private Limited has challenged the capital gains tax assessment made by the Large Taxpayers Office, at the Supreme Court on Sunday. Two days before the seven day deadline for paying Rs 39 billion as the balance of the Capital Gains Tax assessment including fines and interest, one of the largest telecommunications companies in the country is in court to seek the vacating of the LTO decision. It is arguing that the tax assessment is against the SC verdict handed down two weeks ago.
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The court verdict stated that Ncell and its parent company Axiata should pay the CGT and asked LTO to assess the tax within three months. LTO had simply transferred the assessed tax from Teliasonera to Ncell and its parent company Axiata.
Ncell has argued that the LTO’s tax assessment violates constitutional rights and is against the SC verdict.
Ncell said it was not given any information about the tax assessment nor was it asked for any tax filing before the tax was assessed. The interests and fines assessed and added onto the payable CGT is against the SC verdict, according to an excerpt from Ncell’s court appeal . “The tax amount with fines and interest was earlier assessed for Teliasonera. But LTO has now come up with the same assessment including interest and fines, which is against the spirit of the SC verdict of two weeks ago,” reads the excerpt .
Ncell has named LTO and the Inland Revenue Department (IRD) as defendants. NCell argues that the CGT payable should be only Rs 14.36 billion (or 10 percentage points off the total 25 percent CGT) or the remaining amount for the total 25 percent CGT on share transaction prices. Ncell has already paid Rs 23 billion CGT or 15 percent of the total CGT payable.
NCell has also stated that it has petitioned the court as it was not given any alternative remedy although this was guaranteed by the constitution and tax laws. Ncell has also demanded protection of its business until the issues is settled.
Likewise, Ncell has noted that it has the right to move to international arbitration on any matters of taxation, fines and interest. LTO’s chief Dhaniram Sharma could not be contacted for his reaction while IRD’s Director General Bishnu Nepal declined to comment on the matter.