VAT Guide to Value Added Tax - sri lanka inland revenue ...

sufficient communication of reasons. This is the most recent judgement on this issue.
In these circumstances it was considered necessary to deviate from the more strict
wording as appearing in the corresponding section of the Inland Revenue Act.
This does not mean that the assessors should not exercise care in communicating why a
return is rejected. The fact that most assessors, not being legal officers, may not be able
to or may not find the time to, formulate reasons in a manner applicable to legal
submissions, especially in a context where each one of them is required to handle an
extremely large allocation (a few thousand files) is a sailent point to ponder. At times the
reasons adduced in their letters of communications may be interpreted as conclusions
rather than reasons. But the protection of government revenue as covered by these
assessments, which are factually correct, is also of paramount importance. After all
the purpose of the reasons is to enable an aggrieved party to formulate his grounds of
appeal. In this scenario it was thought that if the assessments are correct on facts and
law, leaving room in the legislation to annual assessments on a purely technical ground
such as deficiency in the formulation of reasons by the assessor is not the proper thing
because a genuine taxpayer who does not want to evade an issue can always get any
doubts cleared if the (reasons) communication appear to be not clear or not adequate.
However if a Registered Person is aggrieved by the assessment such person is not
denied a fair hearing, under the rules of natural justice, which is a matter that succeeds
the issue of an assessment (if aggrieved) and not a matter that preceeds the issue
of an assessment. The Act provides a very clearly laid down procedure for the purpose
of providing a fair hearing for an aggrieved party. While the procedural rules of natural
justice have to be observed when the statuary provisions are silent on the procedure to
be adopted (and only when a taxpayers rights are affected by administrative action?) it
must be emphasized that the VAT Act provides clearly the procedure to be adopted when
an assessment is issued and when the assessee is aggrieved by the assessment.
The view that the procedural rules of natural justice should be adhered to only when the
taxpayers rights are affected by administrative action has also been considered . A
taxpayers’ rights will be affected not when a charge sheet (i.e a notice of assessment) is
issued but when and if the recovery proceedings are initiated without recourse to a
hearing.
Further, on the basis of a consensus reached at the GST review committee the
assessors too have been advised administratively to wait for one month as far as
practicable, after the issue of the letter communicating why the return is rejected, so that
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