Default Taxes (Special Provisions) Act 2010

This Act may be cited as the Default Taxes (Special

Provisions) Act, No. 16 of 2010 and the provisions of this

Act other than this section, shall come into operation on such date as may be determined by the Minister by Order published in the Gazette (hereinafter referred to as the

“appointed date”). The provisions of this section shall come into effect, in terms of paragraph (1) of Article 80 of the

Constitution, on the date on which the Certificate of the

Speaker is endorsed.

Notwithstanding anything in any other written law to the contrary, the provisions of this Act shall apply to the recovery, discharge or write-off of taxes charged and levied on or before December 31, 2009 under any of the laws specified in the Schedule to this Act and which continue to be in default under any such laws, for a period of over two years or more, or where applicable, after the appellate procedures specified in any such laws for the recovery of any such tax (in this Act referred to as “tax in default”) have been exhausted :

Provided however where pursuant to any action taken for the recovery of any tax in default prior to the appointed date, a defaulter has agreed to or an effective arrangement has been made for the settlement of such tax in default, by the payment of the same in installments or otherwise and the defaulter concerned has thereafter failed to comply with such agreement or arrangement, as the case may be, the provisions of this Act shall apply in regard to the recovery of the balance sum remaining unpaid in terms of such agreement or arrangement, other than in instances where such agreement or arrangement was entered into or made, in pursuance of an order made by a court.

The Minister shall appoint an Advisory

The quorum for any meeting of the Committee shall be three members and the Chairman shall preside at all meetings of the Committee. In the absence of the Chairman from any meeting of the Committee, the members present shall elect one of the members present to preside at such meeting.

The Committee may regulate the procedure in regard to the meetings of the Committee and the transaction of all business at such meetings.

The Minister may for reasons assigned therefor, remove a member of the Committee from his office by a letter sent to him in that behalf. A member of the Committee may resign from his office by letter to that effect addressed to the Minister and such resignation shall take effect upon it being accepted by the Minister writing.

The members of the Committee may be paid an honorarium in such amount as may be determined by the Minister.

The functions of the Committee shall be to:—

In the discharge of its functions, the Committee shall have the power to summon any person whom it considers is able to give any information or produce any document, with regard to a matter which is before such Committee for its deliberation.

There shall be established a unit called the Default

Tax Recovery Unit under the purview of the Commissioner-General, with a Deputy Commissioner-General assigned to be in charge of such unit.

The Commissioner-General shall within six months of the date of the appointment of the Committee, cause the

Default Tax Recovery Unit to prepare and finalize a report, identifying taxes in default of:—

Public Corporations ;

Government Owned Business Undertakings ;

Government Owned Business Undertakings established as corporations under section 2 of the

Government Ministries ;

Government Departments ; and

Co-operative Societies registered under the

Subject to the provisions of subsection (2), with regard to taxes in default of any institution identified under section 6 of this Act, the Commissioner-General shall:—

The Commissioner-General shall three months prior to taking necessary steps to write-off any tax in default under subsection (1), inform the Committee of such fact and the

Where any tax in default is written-off under section 7 of this Act:—

the Commissioner-General shall, notwithstanding any provision relating to secrecy contained in the law under which the tax in default was levied and charged, publish that information in the Gazette, within thirty days of the date of such write-off ; and

the tax in default which had been written-off is subsequently recovered under the provisions of the relevant law under which such tax was charged and levied, the amount so recovered shall not be refunded to the defaulter.

Where any tax in default is not written-off under section 7, then, notwithstanding:—

A defaulter who is issued with a notice under subsection (1) may, prior to the expiry of the sixty days referred to therein, shall write to the Commissioner-General:—

Where a defaulter makes a request for the payment of the tax in default in installments, the Commissioner-General may agree to such payment, subject to the condition that the payment of the amount due is paid in full within a period not exceeding three years from the date of entering into such agreement. The Commissioner-General shall also inform the

Where the defaulter raises any objections in regard to the payment of the tax in default referred to in a notice sent, the Commissioner-General shall make his decision in regard to the same within sixty days of the receipt of such objections and where the objection involves a re-determination of the tax liability concerned, he shall discharge the excess if any, of the tax in default over the amount so determined.

Where a defaulter to whom a notice is sent under subsection (1) of section 9:—

fails to respond to the notice within the period specified in that subsection ; or

having entered into an agreement with the

The Commissioner-General may for the purpose of any recovery of tax in default under this Act, by notice issued in that behalf require any person to furnish such information within such period as shall be specified in such notice, and it shall be duty of such person to furnish the information requested for within the period so specified. Where however the person is unable for whatever reasons to furnish the information requested for, it shall be his duty to forthwith inform the Commissioner-General of those reasons.

It shall be the duty of the Commissioner-General to ensure that the aggregate of any taxes, not including any penalty accrued thereon or any part of tax held over or deferred, which is in default under any law specified in the

Schedule to this Act as at the end of any calendar year commencing on or after January 1, 2010, over the aggregate of taxes in default as at the end of the immediately preceding year, shall not exceed three per centum of the total tax collected from the taxes levied and charged under the said laws, in the immediately preceding year.

Where the aggregate of taxes, not including any penalty accrued thereon or any part of tax held-over or deferred, which is in default under any law specified in the

In the event that the reasons given by the

Where the reasons given by the Commissioner-General in his report submitted under subsection (1) is not accepted by the Minister as being adequate to warrant such excess, the Minister shall in writing require the Commissioner-General to comply with the requirement imposed by that subsection, within six months of the receipt of his communication.

Where the Commissioner-General fails to comply with a request made under subsection (3) within the time stipulated under that subsection, the Cabinet of Ministers shall take such action against the Commissioner-General, as it shall deem appropriate in the circumstances.

Every members of the Committee shall, before entering upon his duties as such member, sign a declaration pledging to observe strict secrecy in respect of all matters which has come to his knowledge in the discharge of the functions of the Committee under section 4 of this Act and shall by such declaration, pledge himself not to disclose any such matter to anyone, except:—

when required or called upon to do so by any court of law ; or

for the purpose of discharging his functions under this Act.

The Commissioner-General may delegate his function and powers under this Act

The Commissioner-General may delegate to the

Senior Deputy Commissioner-General, any Deputy

Commissioner-General,

Senior

Commissioner,

Commissioner, Deputy Commissioner or an Assessor appointed or deemed to have been appointed under the

Inland Revenue Act, No. 10 of 2006, any of the functions or powers conferred upon him by this Act.

In the event of any inconsistency between the

Sinhala and Tamil texts of this Act, the Sinhala text shall prevail.

In this Act, unless the context otherwise requires:—

“Commissioner-General”, “Senior Deputy Commissioner-General” “Deputy Commissioner-General”, “Senior

Commissioner”, “Commissioner”, “Deputy

Commissioner” and “Assessor”, shall have the same meaning as given to those terms in the Inland

Revenue Act, No. 10 of 2006 ;

“defaulter” means any person whose tax is in default in terms of the provisions of section 2 of this Act ; and

“Government Owned Business Undertaking” means a business undertaking acquired by or vested in the

Government, under the Business Undertaking

(Acquisition) Act, No. 35 of 1971.

The First Schedule to the High Court of the Provinces

(Special Provisions) Act, No. 10 of 1996, is hereby amended by the addition immediately after item (3) of that Schedule, of the following new item :—

“(4) Actions instituted under section 10 of the Default

Taxes (Special Provisions) Act, No. 16 of 2010.”.