(1) Subject to the provisions of this Act, there shall be charged at the time of supply -

(2) Every Order made by the Minister under subsection (1) shall come into force on the date of its publication in the Gazette or on such later date as may be specified in such Order and shall be brought before Parliament for approval within three months of the date of its publication in the Gazette. Any such Order which is not so approved shall be deemed to be revoked as from the date of its disapproval but without prejudice to the validity of anything previously done thereunder. Notification of the date on which any such Order is deemed to be revoked shall be published in the Gazette.

(3) The Tax on the importation of goods shall be charged, levied and collected as if it were a customs duty and as if all goods imported into Sri Lanka are dutiable and liable to customs duty. All regulations and procedures under the customs Ordinance relating. to the promotion of exports shall apply to goods liable to tax, other than to goods which are imported and are used in the manufacture of any article to the supplied in Sri Lanka to an exporter.

(1) The time of supply of goods shall be. When-

(2) The time supply of services shall be when-

(3) Notwithstanding the provision of subsections (1) and (2) a supply is deemed to take place -

(1) The value of taxable supply of goods or services; shall if the supply is-

(2) Subject to the provisions of subsection (3) where a supply of goods or services, is made by a registered person for an amount which is less than the open market value and the person to whom the supply was made is not a registered person, the value in respect of that supply, shall be the open market value of such supply.

(3) where goods or services are supplied by an employer to his employee as a benefit from employment, the value in money for the supply shall be the open market value of such supply of where the open market value of such supply cannot be ascertained the value in money of that supply shall be the cost of an similar benefit enjoyed by any other person as may be determined by the assessor.

(4) Where a supply of services is made under any lottery, or any taxable activity of entering into or negotiating a wagering contract or any business of like nature, the value of such supply shall be the total amount of money receivable in respect of such supply less the consideration of the prizes or winnings awarded in such lottery, such contract, or any business of like nature as the case may be.

(5) Where goods or services -

(6) Where the consideration in respect of a supply of goods or services relates to a taxable supply and a supply which is not taxable, the consideration for such taxable supply shall he deemed to be such part of the consideration as is attributable to such taxable supply and shall not be less than the open market value of such taxable supply.

(7) Where goods are manufactured or produced by using any other goods, whether provided by the supplier or any other person such other goods shall he deemed to be used in the manufacture or production and the value of the supply of the goods so manufactured or produced and the supply of services in connection with such manufacture or production shall be the open market value or the amount of consideration received for, such supply whichever is higher ;

Provided however, where it is proved to the satisfaction of an Assessor that the supply of goods, and the supply of services are two separate supplies, the Assessor shall treat each such supply as a separate supply.

(8) The value of the supply of goods under a hire purchase agreement shall be the cash price determined in accordance with the provisions of the Consumer Credit Act, No. 29 of 1982, and shall not be less than the open market value.

(9) The value of the supply of land shall be the value of improvements effected on such land after the appointed date and shall not be less than the open market value.

(10) Where goods or services are supplied either on the issue of a ticket or by the deposit of money the value of such supply shall be the amount paid for such ticket or the amount deposited, not being any amount which is refundable as the case may be.

(1) The value of goods, imported shall be the aggregate of-

(2) In calculating the value of any goods for the purposes of subsection (1) there shall be included an amount charged in respect of any-

(1) A Supply of-

(2) Where a registered person supplies any goods or services which is zero rated then-

(1) Every person who on or after the appointed date carries on or carries out any taxable activity in Sri Lanka shall be liable to be registered under this Act if-

(2) Every persons who is liable to be registered under subsection (1) shall make an application in the specified form not later than fifteen days from the date on which he becomes so liable.

For the purpose of this section total value of taxable supplies shall not include the supplies of any wholesale or retail trading activity not being the trading activities carried on by a manufacturer of the goods or as an importer of those goods.

(1) Every person who is an importer of goods into Sri Lanka shall be liable to notify the Commissioner- General nor later than fourteen days prior to the cleaning of such goods, and obtain from the Commissioner- General an identification number for the clearing of such goods ;

Provided however, a person who imports into Sri Lanka goods for his personal use or a person who is registered under section 10 or section 12 shall not be liable to notify the Commissioner-General.

(2) Every importer liable to notify the Commissioner-General and obtain an identification number under subsection (1) shall make an application in the specified form to the Commissioner-General.

(a) makes an application for registration under section 10 or section 12, such person shall be registered under this Act;

(b) has not made an application for registration but where the Commissioner-General is of opinion having regard to the nature and the transactions carried on or carried out by him, that such person is liable to be registered under this Act, he shall after affording such person an opportunity of being heard, register such person with effect from such date as may be determined by him.

(1) The Commissioner-General shall, upon registering a person, issue-

(2) The certificate of registration shall set out the name and other relevant details of the registered person, the date on which registration comes into effect, and the tax registration number of such person.

(3) The person to whom a certificate of registration is issued under subsection (1) shall, display such certificate at conspicuous the place where he carries on or carries out the taxable activity Copies of such certificate may be displayed in the event of there being more than one place of business.

(4) Where any person fails to comply with the requirements of subsection (3) the Commissioner-General may-

(5) The Commissioner-General may reduce, or annul any penalty imposed on any person under paragraph (a) of subsection (4) if such person proves to the satisfaction of the Commissioner-General that his failure to comply with the requirements of subsection (3) was due to circumstances beyond his control and that he has subsequently complied with such requirements.

(1) A registered person may make an application to have his registration cancelled at any time after the lapse of eight successive taxable periods following the date of registration where such registered person has ceased to carry on or carry out a taxable activity or the total value of his taxable supplies for such taxable periods does not exceed the value set out in section 10.

(2) The Commissioner-General shall, subject to the provisions of subsection (3) where he is, satisfied that such person has ceased to carry on or carry out a taxable activity or that the total value of his taxable supplies does not exceed the value set out in section 10, cancel his registration.

(3) The Commissioner-General may refuse to cancel the registration of any person registered under section 10 or section 12 where the Commissioner- General is of the opinion that such person has not ceased to carry on or carry out a taxable activity or that it is necessary and expedient to continue with his registration for the pro protection of revenue.

(4) Where the Commissioner-General cancels the registration of any person he shall inform such registered person of the date of cancellation of the registration by registered post.

(5) With effect from the date of cancellation of the registration, any goods or services then forming part of the assets of a taxable activity carried on or carried out by that person shall be deemed to be supplied by that person in the course of carrying on or carrying out a taxable activity at a time immediately prior to the. date of cancellation unless the taxable activity (inclusive of all such assets) is carried on or carried out by another person who is a registered person.

(1) Where the registration of any person has been cancelled by the Commissioner-General such person shall-

(2) Where any person fails to comply with the requirements of subsection (1) the Commissioner-General may-

(3) The Commissioner-General may reduce, or annul any penalty imposed on any person under paragraph (a) of subsection (2) if such person proves to the satisfaction of the Commissioner-General that his failure to comply with the requirements of subsection (1) was due to circumstances beyond his control and that he has subsequently complied with such requirements.

(a) any change, in the name, address and place, at which any taxable activity is carried on or carried out by such person ;

(b) any change in the nature of the taxable activity carried on or carried out by him ;

(c) any change in the person authorized to sign returns and other documents ; and

(d) any change in ownership of the taxable activity,

not later than fourteen days after the occurrence of the change.

(1) A registered person who makes a taxable supply shall issue to another registered person to whom a supply is made a tax invoice not later than fourteen days after the time of such supply.

(2) The tax invoice shall set out-

(3) Where goods have been imported into Sri Lanka the customs goods declaration or any other document authenticated by the Director-General of Customs shall be treated as a tax invoice.

(4) The original of the tax invoice shall be issued to the person to whom the supply was made and the duplicate of such invoice shall be retained by the person who makes such supply, for a period of five years after the expiry of the taxable period in which such invoice was issued.

(5) It shall not be lawful to issue more than one tax invoice for each supply. If a registered person claims to have lost the original tax invoice, the person who makes the supply may issue to such registered person a copy clearly marked "copy only".

(6) Where a taxable supply is made by a registered person to a person who is not registered, such registered person shall issue an invoice, to such person who is not registered, setting out the consideration inclusive of the tax of such supply and the rate of tax applicable to such supply.

(7) Any person who contravenes the provisions of subsection (1) shall be guilty of an offence and shall be liable on conviction after summary trial before a Magistrate, to a fine not less than rupees twenty-five thousand and not exceeding rupees two hundred and fifty thousand and thereafter in the event of the offence being continued to be committed, after conviction to a fine of rupees five hundred for each day on which the offence is so continued to be committed.

(8) Where any person convicted of an offence under subsection (7) continues to commit such offence after a period of fourteen days from the date of his conviction, the court may upon an application for closure of the business being made by the Commissioner-General or any officer authorized in that behalf by the Commissioner-General order the closure of such business.

(9) In any case where such person fails to comply with the closure order issued under subsection (8), the Magistrate shall forthwith order the fiscal of the court requiring and authorizing such fiscal before a date specified in such order not being a date earlier than three or later than seven clear days from the date of issue of such order to close such business. Such order shall be sufficient authority for the said fiscal or any police officer authorized by him in that behalf to enter the premises in which the business is carried on or carried out with such assistants as the fiscal or such police officer shall deem necessary to close such business.

(1) Every registered person shall furnish, to the Commissioner-General not later than fifteen days after the expiry of each taxable period a return of his supplies during that taxable period. Every such return shall be in the specified form and shall contain all such particulars as may be required to be set out in such form.

(2) Notwithstanding the provisions of subsection (1)-

(3) An Assessor may, by notice in writing, require any person who, in his judgment is a person chargeable with tax notwithstanding the fact that he is not registered, to furnish, a return in the specified form within the time specified in such notice.

(4) For the purposes of obtaining full information in respect of the supply of goods or services made by any person, an Assessor may give notice in writing to such person requiring him-

(5) For the purposes of this Act, a Deputy Commissioner may give notice in writing to any person requiring him-

(6) A person who attends in compliance with a notice given under subsection (5) may he allowed by the Commissioner-General any reasonable expenses necessarily incurred by him in so attending.

(7) A Deputy Commissioner or an Assessor with the approval of a Deputy Commissioner, may retain in his custody as long as such retention is necessary for the purpose of this Act any books of accounts whether contained in a manual, mechanical or electronic format or combination thereof, trade lists, stock lists, registers, invoices, cheques, bank statements, paying-in-slips, accounts, auditors reports or other documents in his possession as may be specified in order to verify the entries in such books, documents and accounts.

(8) An Assessor may give notice in writing to any person where he thinks necessary, requiring him to furnish within the time specified in such notice-

(9) A return, statement or form purporting to be furnished under this Act by or on behalf of any person shall for all purposes be deemed to have been furnished by that person or by his authority, as the case may be, unless the contrary is proved, and any person signing such return, statement or form shall be deemed to he cognizant of all matters contained therein.

(10) Where any person fails to comply with the requirements of subsection (1) or fails to comply with the requirements of a notice given to him by an Assessor under subsection (3) directing him to furnish within the time specified in such notice, a return containing such particulars as the Assessor may require, the Commissioner-General may-

(11) The Commissioner-General may reduce or annul any penalty imposed on any person under paragraph (a) of subsection (10) if such person proves to the satisfaction of the Commissioner-General that his failure to comply with the requirements of subsection (1) or the direction under subsection (3), as the case may be, was due to circumstances beyond his control and that he has subsequently complied with such requirements or direction.

(12) Where a penalty is imposed under subsection (10) for failure to furnish a return under subsection (1) or to comply with a direction under subsection (3) such person shall not be liable to prosecution for any offence under section 68 (f) relating to that return or notice.

(1) A registered person shall, in respect of taxable supplies made by him, account for and pay the tax by reference to such taxable periods at such time and in such manner as may be specified in this Act.

(2) Subject to the provisions of this Act, a registered person is entitled at the end of each such period to credit for so much of his input tax as is allowable under this Act. and then to deduct such amount from any output tax that is due from him.

(3) Where goods or services supplied to a registered person, or goods imported by him, are used or to be used partly for the purposes of a taxable activity carried on or carried out by him and partly for other purposes, the tax on supplies and importations shall be apportioned so that only so much of the tax on such supply or importation as is referable to his taxable activity shall be counted as his input tax.

(4) Where any return is furnished under section 21, and if at the end of any taxable period to which the return relates, the amount of the input tax exceeds the amount of the output tax the excess of the input tax shall not be refunded but shall be set off against the output tax of the next succeeding taxable period and so on. Any residue of such excess as has not been so set off in the period of six months from the end of the period in which such excess first arose shall subject to provisions of section 58 be refunded and where it is not so refunded, the Commissioner-General shall pay interest, at such rate as is prescribed under section 59 in such amount, for the period commencing on the expiration of one month from the end of such taxable period in which the refund became due and ending on the date of the refund :

Provided, however, that where in any month in a taxable period -

(5) Any input tax attributable to the supply of goods or services shall not be deducted under subsection (2) in respect of the following :-

(1) Where a registered person, has issued a tax invoice and accounted for an incorrect amount of tax by undercharging or overcharging tax on a supply made to another registered person, he shall be entitled to issue to such other person a tax debit note or a tax credit note, as the case may be for the purpose of adjusting the amount of tax so undercharged or overcharged.

(2) Upon the issue of the tax debit note or tax credit note as the case may be, in respect of a supply and in relation to the period in which such note was issued-

(3) The tax debit note or tax credit note referred to in subsection (1) shall be in the specified form.

(1) The tax in respect of any taxable period shall be paid not later than the fifteenth day of the month following the end of that taxable period. Any tax not so paid shall be deemed to be in default and the person by whom such tax is payable or where any tax is payable by more than one person, each such person shall be deemed to be a defaulter for the purposes of this Act:

Provided however, where the value of the taxable supplies for any taxable period exceeds five million rupees, or such other amount as may be determined by the Minister by Order published in the Gazette, the tax calculated as provided in section 22 in respect of the taxable supplies made in every month following such taxable period shall be paid not later than the fifteenth day of the succeeding month until the value of the taxable supplies ceases to exceed five million rupees or such other amount as may be determined by the Minister and any tax not so paid shall be deemed to be in default:

Provided further where a return for the first or the second month has not been furnished by any person in any taxable period as provided for in section 21, the tax in default for such month shall be deemed to he an amount equal to one-third of the tax payable for such taxable period.

(1) Where any tax is in default, the defaulter shall, in addition to such tax in default pay as penalty-

(2) Where upon the final determination of an appeal under Chapter VI, any tax in default to which any sum or sums under subsection (1) has or have been added, is reduced, then such sum or sums shall be calculated on the tax so reduced.

(1) Where-

(2) An assessment made under subsection (1) in respect of any person for any taxable period shall not affect the liability of such person to a penalty under section 27 as though the amount assessed was the amount of tax due from him for that taxable period.

(3) Where, in the opinion of the Assessor, the amount paid as tax for any taxable period by any person who has failed to furnish a return in respect of a taxable period is less than the actual amount payable by that person for that taxable period, the Assessor shall assess the amount which, in the judgment of the Assessor, ought to have been paid by such person and shall, by notice in writing, require that person to pay on or before a date specified in that notice, the difference between the amount so assessed and the amount paid by that person.

(4) Where an assessment is made under subsection (3) in respect of any person for any taxable period the difference between the amount so assessed and the amount paid by that person as tax for the taxable period as provided in section 26, shall be the tax in default for that taxable period and accordingly such person shall, from the date on which such person ought to have paid the tax for that taxable period, be liable in respect of that amount to the penalty.

(1) Where it appears to an Assessor that a person chargeable with tax has for any taxable period paid as tax an amount less than the proper amount of the tax payable by him for that taxable period, or chargeable from him for that period, the Assessor may, at any time, assess such person on the additional amount at which, according to the judgment of such Assessor, tax ought to have been paid by such person. The Assessor shall give notice of assessment to such person.

(2) Where an assessment is made under subsection (1) in respect of any person for any taxable period, the amount so assessed shall be deemed to be the tax in default for that taxable period and accordingly such person shall, from the date on which such person ought to have paid the tax for that taxable period be liable to the penalty in respect to such amount.

(1) Where any registered person has furnished a return in respect of any taxable period or has been assessed for tax in respect of that period, it shall not be lawful for the Assessor where an assessment -

(2) Notwithstanding anything in subsection (1) where the Assessor is of opinion that a person has willfully or fraudulently failed to make a full and true disclosure of all the material facts necessary to determine the amount of tax payable by him for any taxable, period, it shall be lawful for the Assessor where an assessment -

(1) Any registered person may, if he is dissatisfied with any assessment or additional assessment made in respect of him by an Assessor, or a penalty imposed under this Act, appeal against such assessment or additional assessment or penalty to the Commissioner-General within thirty days after the service of notice of such assessment, additional assessment or imposition of penalty as the case may be. Such person shall, notwithstanding the appeal, pay the tax charged by such assessment or additional assessment together with any penalty imposed on him by this Act:

Provided that the Commissioner-General, upon being satisfied that, owing to absence from Sri Lanka, sickness or other reasonable cause, the appellant was prevented from appealing within such period, shall grant an extension of time for preferring the appeal.

(2) Every appeal shall be preferred by a petition in writing addressed to the Commissioner-General and shall state precisely the grounds of such appeal.

(3) Where the assessment or additional assessment appealed against has been made in the absence of a return, the petition of appeal shall be accompanied by a return.

(4) Every person preferring an appeal under subsection (1) against an assessment for any taxable period shall (unless such person has done so already), pay to the Commissioner-General the amount of the tax payable by such person on the basis of the return furnished by him for such period together with any penalty thereon accrued up to the date of such notice of assessment, and shall attach, to the petition of appeal the receipt in proof of such payment:

Provided that the Commissioner-General, upon being satisfied that owing to serious financial hardship suffered by the appellant at or about the time of such notice of assessment or, owing to other reasonable cause, the appellant was prevented from paying such tax and such penalty, may grant an extension of time for the payment of such tax and penalty thereon accrued up to the date of payment and the receipt furnished within such extended time shall, for the purposes of this subsection, be deemed to have been attached to the petition of appeal.

(5) Every petition of appeal which does not conform to the provisions of subsections (1), (2). (3) and (4) shall not be valid.

(6) On receipt of a valid petition of appeal, the Commissioner-General may cause further inquiry to be made by an Assessor, and if in the course of such inquiry an agreement is reached as to the matters specified in the petition of appeal, the necessary adjustment of the assessment shall be made.

(7) Where, no agreement is reached between the appellant and the Assessor in the manner provided in subsection (6), the Commissioner-General shall fix a time and place for the hearing of the appeal.

(8) Every appellant shall attend before the Commissioner-General at the time and place fixed for the hearing of the appeal. The appellant may attend the hearing of the appeal in person or by an authorized representative. The Commissioner-General may, if he thinks fit, from time to time, adjourn the hearing of an appeal for such time and place as he shall fix for the purpose. In any case in which an authorized representative attends on behalf of the appellant, the Commissioner-General may adjourn the hearing of the appeal and may, if he considers that the personal attendance of the appellant is necessary for the determination of the appeal, require that the appellant shall attend in person at the time and place fixed for adjourned hearing of the appeal. If the appellant or his authorized representative fails to attend at the time and place fixed for hearing or any adjourned hearing of the appeal, or if the appellant fails to attend in person when required so to attend by the Commissioner-General, the Commissioner-General shall dismiss the appeal:

Provided that, if the appellant within a reasonable time after the dismissal of an appeal satisfies the Commissioner-General that he or his authorized representative was prevented from due attendance at the hearing or at any adjourned hearing of such appeal by reason of absence form Sri Lanka, sickness, or other reasonable cause, the Commissioner-General may vacate the order of dismissal and fix a time and place for the hearing of the appeal;

Provided further, that every petition of appeal under this Chapter shall be agreed to or determined by the Commissioner-General within three years from the date on which such petition of appeal is received by the Commissioner-General, unless the agreement or determination of such appeal depends on the furnishing of any document or the taking of any action by any person other than the appellant or the Commissioner-General or an Assessor. Where such appeal is not agreed to or determined within such period the appeal shall deemed to have been allowed and the tax charged accordingly. The receipt of any appeal under this section shall be acknowledged and the date of the letter of acknowledgment shall for the purposes of this section be deemed to be the date of receipt of such appeal:

For the purposes of this proviso where an extension of time has been granted to an appellant for the payment of tax under subsection (4) the date of the receipt in proof of the payment of tax shall be deemed to be the date of receipt of such Appeal.

(9) The Commissioner-General shall have power to summon any person whom he may consider able to give evidence in respect of the appeal, to attend before him and examine such person on oath or otherwise. Any person so attending may be allowed by the Commissioner-General any reasonable expenses necessarily incurred by such person in so attending.

(10) Before making his determination on any appeal, the Commissioner-General may, if he considers it necessary so to do, by notice given in writing to any person require that person to produce for examination, or to transmit to the Commissioner-General within the period specified in such notice, any such deeds, plans, instruments, books, accounts, trade lists, stock lists, registers, cheques, paying in slips, auditors reports or other documents in his possession as may be specified in such notice.

(11) Where the Commissioner-General hears the evidence of the appellant or of any other person in respect of the appeal, he shall maintain or caused to be maintained a record of such evidence.

(12) In determining an appeal under this section the Commissioner-General may confirm, reduce, increase or annul the assessment appealed against and shall give notice in writing to the appellant of his determination on the appeal.

(1)The decision of the Board of Review shall be final :

Provided that either the appellant or the Commissioner-General may make an application requiring the Board of Review to state a case on a question of law for the opinion of the Court of Appeal.

(2) The provisions of the Inland Revenue Act, No. 28 of 1979 relating to appeals to the Court of Appeal and to the Supreme Court shall, mutatis mutandis, apply to an application and reference under this section.

(1) For the purposes of this Chapter " tax " includes penalty imposed or incurred under this Act.

(2) Whenever the Commissioner-General issues a certificate under section 42 or section 43 or a notice under section 44, he shall at the same time issue to the defaulter a notification thereof by personal service or by registered letter sent through the post or by telegraph, but the non-receipt of such notification by the defaulter shall not invalidate proceedings under this section.

(i) such charge shall not extend to or affect any assets sold by such person to a bonafide purchaser for value prior to the seizure of the same in accordance with the provisions of section 42 :

(ii) as regards immovable property, the tax shall not rank in priority to any lease or encumbrance created bona fide for value and registered prior to the date of the seizure ;

(iii) as regards movable property, where the tax for more than four taxable periods is in default, the tax for four taxable periods only to be selected by the Commissioner-General, shall rank in priority to any lien or encumbrance created bonafide for value prior to the date of default of such tax.

(1) Where any tax is in default, the Commissioner-General shall, before proceeding to recover such tax, issue a notice in writing to the defaulter stating-

(2) If the defaulter has not appealed within the specified time against the assessment in respect of which such tax is charged, he may within thirty days of the date of such notice make any objection to the tax so charged to the Commissioner-General and the Commissioner-General shall notwithstanding the provisions of section 37 consider such objections and give his decision thereon which shall be final.

(1) The Commissioner-General may appoint persons to be tax collectors for the purposes of this Act.

(2) Where any tax is in default, the Commissioner-General may issue a certificate to a Divisional Secretary, Assistant Divisional Secretary, Fiscal, Deputy Fiscal or tax collector containing particulars of such tax and the name and address of the defaulter, and the officer to whom such certificates is issued shall be empowered and is hereby required to cause the tax to be recovered form the defaulter named in the certificate by seizure and sale of his movable property.

(3) The seizure referred to in subsection (2) shall be effected in such manner as the said officer shall deem most expedient in that behalf and any property so seized shall be kept for seven days at the costs and charges of the defaulter. If the defaulter fails to pay the said tax in default together with the costs and charges within the said seven days the Divisional Secretary, Assistant Divisional Secretary, Fiscal, Deputy Fiscal or tax collector as the case may be shall cause such property to be sold by public auction.

(4) The sum realized by the sale shall be applied-

(5) It shall be lawful for a tax collector to recover from the defaulter reasonable expenses incurred by him in proceeding against the defaulter under this section notwithstanding that the seizure was not effected. Where cash is seized such reasonable expenses shall be set off first from the amount so seized.

(6) Where any tax is in default, and the Commissioner-General is of opinion that recovery by the means provided in subsection (2) is impracticable or inexpedient, he may issue a certificate to a District Court having jurisdiction in any district where the defaulter resides or in which any property movable or immovable owned by the defaulter is situate containing such particulars of tax and the name and address of the person or persons by whom, the tax is payable, and the court shall there-upon direct a writ of execution to issue to the Fiscal authorizing and requiring him to seize and sell all or any of the property movable and immovable of the defaulter or such part thereof as he may deem necessary for recovery of the tax, and the provisions of sections 226 to 297 of the Civil Procedure Code shall, mutatis mutandis, apply to such seizure and sale.

For the purposes of this section "movable property" shall include plant and machinery.

(1) Where the Commissioner-General is of opinion in any case that recovery of tax in default by seizure and sale is impracticable, or inexpedient or where the full amount of the tax in default has not been recovered, he may issue a certificate containing particulars of such tax and the name and last known place of business or residence of the defaulter, to a Magistrate having jurisdiction in the division in which such place of business or residence of the defaulter is situate. The Magistrate shall thereupon summon such defaulter before him to show cause why further proceedings for the recovery of the tax should not be taken against him, and in default of sufficient cause being shown, the tax in default shall be deemed to be a fine imposed by a sentence of the Magistrate on such defaulter for an offence punishable with fine only or not punishable with imprisonment and the provisions of subsection (1) of section 291 (except paragraphs (a), (d) and (i) thereof), of the Code of Criminal Procedure Act, No. 15 of 1979, relating to default of payment of a fine imposed for such an offence shall thereupon apply, and the Magistrate may make any direction which, by the provisions of that subsection, he could have made at the time of imposing such sentence :

Provided that nothing in this section shall authorize or require the Magistrate in any proceeding thereunder to consider, examine or decide the correctness of any statement in the certificate of the Commissioner-General.

(2) Nothing in subsections (2) to (5) of section 291 of the Code of Criminal Procedure Act, No. 15 of 1979, shall apply in any case referred to in subsection (1).

(3) In any case referred to in subsection (1) in which the defaulter is sentenced to imprisonment in default of payment of the fine deemed by that section to have been imposed on him, the Magistrate may allow time for the payment of the amount of the said fine or direct payment of that amount to be made in installments.

(4) The Court may require bail to be given as a condition precedent to allowing time under subsection (1) for the showing cause as therein provided or under subsection (3) for the payment of the fine; and the provisions of Chapter XXXIV of the Code of Criminal Procedure Act, No. 15 of 1979, shall apply where the defaulter is so required to be given bail.

(5) Where payment in installments is directed under subsection (3) and default is made in the payment of any one installment, the same proceedings may be taken as if default had been made in payment of all the installments then remaining unpaid.

(1) Where the tax payable by any person is in default and it appears to the Commissioner-General to be probable that any person-

(2) Any person who has made any payment in pursuance of this section shall be deemed to have acted under the authority of the defaulter and of all other persons concerned, and is hereby indemnified in respect of such payment against all proceedings, civil or criminal, notwithstanding the provisions of any written law, contract or agreement.

(3) Where any person to whom a notice has been given under subsection (1) is unable to comply therewith owing to the fact that moneys in question do not come into his hands or custody or become due from him during the period referred to in subsection (1), he shall within fourteen days of the expiration thereof give notice in writing to the Commissioner-General appraising him of the facts.

(4) Where any person to whom a notice has been given under subsection (1) is unable to comply therewith and has failed to give notice to the Commissioner-General as provided in subsection (3) or where such person has deducted or could have deducted the tax to which the notice relates or any part thereof and has not paid over as required by the Commissioner-General the amount of such tax or part thereof within fourteen days after the expiration of the period referred to in subsection (1), such person shall, if he is an individual, be liable or where such person is a company or body of persons, whether corporate or unincorporate the secretary, manager, or the principal officer of such company or body be personally liable, for the whole of the tax which such person has been required to deduct, and such tax may be recovered front such individual, secretary, manager or other principal officer, as the case may be, by all means provided in this Act.

(5) For the purposes of this section the expression "defaulter" shall be deemed to include the agent of a person who is in default and the provisions of this section shall apply in any case where the tax which would have been payable by any person if he were alive is in default, and for the purpose of the application of these provisions in any such case, the expression "defaulter" in subsection (1) means -

(1) Where the Commissioner-General is of opinion that any person is about to or likely to leave Sri Lanka without paying the tax due from him, the Commissioner-General may issue a certificate containing particulars of such tax and the name of such person to a Magistrate, who shall on receipt thereof issue a direction to the Inspector-General of Police to take such measures as may be necessary to prevent such person from leaving Sri Lanka without paying the tax or furnishing security to the satisfaction of the Commissioner-General for payment thereof.

(2) At the time of issue of the certificate to the Magistrate the Commissioner-General shall issue to such person a notification thereof by personal service, or registered letter sent through the post or telegraph; but the non receipt of any such notification by such person shall not invalidate proceedings under this section.

(3) The production of a certificate signed by the Commissioner-General stating that the tax has been paid or that security has been furnished for the payment of the tax or payment of the tax to a police officer in charge of a police station shall be sufficient authority for allowing such person to leave Sri Lanka.

(4) Any police officer to whom the amount of any tax specified in such certificate has been paid shall forthwith pay such amount to the Commissioner-General.

(1) Where a body corporate has not paid any tax on or before the due date, it shall be lawful to proceed under all or any of the provisions of this Chapter against a manager, director, secretary or any other principal officer of such body corporate, whether such officer is responsible or not for such default notwithstanding anything in any other written law relating to such body corporate.

(2) Where a partnership or a joint venture has not paid any tax on or before the due date, it shall be lawful to proceed under all or any of the provisions of this Chapter against any partner or a member of the joint venture, as the case may be, whether such person is responsible or not for such default, notwithstanding anything in any other written law.

(1) The Commissioner-General may by writing under his hand, delegate to any Assessor any of the powers and functions conferred on or assigned to the Commissioner-General by this Chapter.

(2) Every Assessor to whom any power or function has been delegated under subsection (1) shall exercise or discharge that power or function subject to the general or special directions of the Commissioner-General.

(1) The secretary, manager, director or other principal officer of every company or body of persons, corporate or unincorporate, shall be liable to do all such acts, matters or things as are required to be done under the provisions of this Act by such company or body of persons :

Provided that any person to whom a notice has been given under the provisions of this Act on behalf of a company or body of persons shall be deemed to be the principal officer thereof unless he proves that he has no connection with that company or body of persons or that some other person resident in Sri Lanka is the principal officer thereof.

(2) Where an offence under this Act is committed by a company or body of persons, corporate or unincorporate, every person who at the time of the commission of the offence was the secretary, manager, director or other principal officer of the company or body of persons shall be deemed to be guilty of that offence unless he proves that the offence was committed without his knowledge and that he exercised all such diligence to prevent the commission of that offence as he ought to have exercised having regard to the nature of his functions in such capacity.

(1) Subject as hereinafter provided, where during the course of a taxable period a person chargeable with tax ceases to carry on or carry out any taxable activity in respect of which he is chargeable with such tax, he shall, notwithstanding that he had ceased to carry on or Carry out such taxable activity, be liable to pay such tax for the period during which he carried on or carried out that taxable activity during that taxable period.

(2) Where any person carrying on or carrying out a taxable activity transfers the assets of such taxable activity to any other person, resulting in a change of ownership of any trade or business, tax payable in respect of such taxable activity for any period prior to the transfer may, if it cannot be recovered from the transfer or be recovered from the transferee notwithstanding that an assessment may not have been made on the transferee and the provisions of this Act as to collection and recovery of tax shall apply accordingly.

(1) Where any person chargeable with the tax dies, the executor of such deceased person shall in respect of all taxable periods prior to the date of death of such person be chargeable with tax which such person would be chargeable if he were alive, and shall be liable to do all acts, matters and things which such person if he were alive, would be liable to do under this Act:

Provided that-

(2) Where an executor on behalf of the estate of a deceased person carries on or carries out any taxable activity which is a part of such estate, such executor shall in respect of such taxable activity, be chargeable with the tax with which such person would be chargeable if he were alive.

(1) Notwithstanding anything in the Companies Act, No. 17 of 1982, where a company is wound up and where any tax to which that company is liable cannot be recovered then every person who was a director of the company at any time during the period in respect of which such tax is payable shall be jointly and severally liable for the payment of such tax unless he proves that the default in payment of tax cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company, and the provisions of this Ac t as to collect ion and recovery of tax shall apply accordingly.

(1) Where a registered person makes an application for a refund of any tax or any penalty paid by him in excess during the taxable period within three years immediately after the end of the taxable period and satisfies the Commissioner-General that such person has paid any tax or any penalty in excess of the amount which he was liable to pay for that period, such person shall be entitled to a refund of the amount paid in excess, subject to provisions of subsection (3):

Provided however,

shall be entitled to a refund of such tax or penalty paid in excess within a period of thirty days from the date of receipt of the application.

(2) Where through death, incapacity, bankruptcy, liquidation or other cause a registered person who would but for such cause have been entitled to make a claim under subsection (1) is unable to do so, his executor, trustee or receiver as the case may be, shall be entitled to a refund of any tax or penalty paid in excess within the meaning of subsection (1) by such person for the benefit of such person or his estate.

(3) Notwithstanding anything in subsection (1)-

(1) Where any amount refundable under this Act to refunds a registered person has not been refunded within a period of thirty days from the due date of such refund there shall be paid by the Commissioner-General to such person interest on such amount for the period commencing on the thirtieth day from the due date up to the date of refund of the amount as is required to be refunded by the Commissioner-General to such person under this Act, at the rate prescribed by the Minister from time to time.

(2) For the purposes of this section "due date" means the period ending ninety days-

(1) Every person who makes any payment in Deduction of tax pursuance of a contract to which he is a party or on behalf of from payments-any other person who is a party to a contact shall, whether or not such contract was entered into prior to the appointed date, deduct from such payment, tax which shall be a percentage of such payment at such rate as may be determined by the Minister by Order published in the Gazette and the amount of tax so deducted shall be a debt due from such person to the Republic and shall be recoverable forthwith or may be assessed and charged upon such person in addition to any tax, if any, payable by him under this Act:

Provided that where the total consideration payable for the performance of such contract does not exceed one million rupees no such deduction shall be made.

(2) Any person who deducts tax in accordance with the provisions of subsection (1) shall-

(3) Where the taxable supplies of a person include a sum from which tax has been deducted in accordance with subsection (1) he shall be entitled on production of a statement relating to such sum issued in accordance with subsection, (2) to a set off against the tax payable by him, of the amount shown on such statement as the amount of tax deducted.

(4) For the purposes of this section "contract" means-

(5) Any person who fails to deduct tax in terms of subsection (1) or fails to remit under subsection (2) any tax to the Commissioner-General shall be deemed to be in default and the provisions of this Act relating to recovery of tax shall accordingly apply on any such default.

(6) Any person who has made any deduction under subsection (1) or any remittance in pursuance of subsection (2) shall be deemed to have acted under the authority of the person by whom the tax was payable and of all other persons concerned, and is hereby indemnified in respect of such deduction or remittance, as the case may be, against all proceedings, civil or criminal, notwithstanding the provisions of any written law, contract or agreement.

(7) Where any person has entered into two or more contracts and the Assessor, having regard to the nature and the parties to such contracts, is of opinion that the persons to whom the payments were made in respect of such contracts is one and the same person or his agent, the sum paid or payable shall be aggregated for the purposes of subsection (1).

(1) Every notice required to be given by the Signature and Commissioner-General, a Deputy Commissioner or an service of notices. Assessor under this Act shall bear the name of the Commissioner-General or Deputy Commissioner or Assessor, as the case may be, and every such notice shall be valid if the name of the Commissioner-General, Deputy Commissioner or Assessor is duly printed or signed thereon.

(2) Every notice given by virtue of this Act may be served on a person either personally or by being delivered at, or sent by post to, his last known place of abode or any place at which he is, or was carrying on or carrying out a taxable activity during the period to which the notice relates.

(3) Any notice sent by post shall be deemed to have been served on the day on which it could have been received in the ordinary course of post.

(4) In proving service by post it shall be sufficient to prove that the letter containing the notice was duly addressed and posted.

(5) Every name printed or signed on any notice or signed on any certificate given or issued for the purposes of this Act, which purports to be the name of the person authorized to give or issue the same, shall be judicially noticed.

(1) No notice, assessment, certificate or other proceeding purporting to be in accordance with the provisions of this Act shall be quashed or deemed to be void or voidable for want of form or be affected by reason of a mistake, defect or omission therein, if the same is in substance and effect in conformity with, or according to, the intent and meaning of this Act, and if the person assessed or intended to be assessed or affected thereby is designated therein according to common intent and understanding.

(2) Without prejudice to the generality of subsection (1), an assessment shall not be affected or impugned-

if the notice of such assessment is duly served on the person intended to be charged and contains in substance and effect the particulars mentioned in paragraph (a) of this subsection.

(1) Any officer of the Department of Inland Revenue who is special authorized by the Commissioner-General in that behalf may, accompanied by a peace officer, do all or any of the following acts :-

In this subsection "peace officer" shall have the same meaning as in the Code of Criminal Procedure Act, No. 15 of 1979.

(2) Before authorizing any officer to exercise the powers under subsection (1), the Commissioner-General shall record the circumstances which necessitate the exercise of those powers by that officer.

(3) Where any officer authorized by the Commissioner-General under subsection (1) seizes any book of account, register, record or other document from any person, such officer shall issue to that person a memorandum specifying the book, register, record or other document he has seized.

(4) Any book of account, register, record or other document seized under subsection (1) by any officer may be retained in the possession of such officer as long as may be necessary for a scrutiny of such book, register, record or other document or for the institution of legal proceedings against the person to whom such book, register, record or other document belongs.

(1) The Commissioner-General or any other officer of the Department of Inland Revenue who is specially e authorized in that behalf by the Commissioner-General in writing may do all or any of the following acts:-

(2) Where an officer authorized by the Commissioner-General under subsection (1), takes into his possession any book of account, register, record or other document from any person, such officer shall issue to that person a memorandum specifying the book, register, record or document he has taken into his possession.

(3) Any book of account, register, record or other document taken into his possession under subsection (1) by any officer may be retained in the possession of such officer as long as may be, necessary for the purpose of scrutinizing such book, register, record or document or for the institution of legal proceedings against the person to whom such book, register, record or other document belongs.

(1) Every registered person shall keep and maintain records in respect of the taxable activity carried on or carried out by him to enable the Commissioner-General or any other officer authorized by the Commissioner-General on that be-half to ascertain the liability for the payment of the tax.

(2) The form of the records, to be maintained under subsection (1) and the particulars to be set forth therein shall be as prescribed.

For the purpose of this section the term "records" includes-

(1) Every person who-

(a) gives any false answer whether orally or in writting to any question or request for information asked or made in accordance with the provisions of this Act; or

(b) omits from a return made under this Act, any particulars which he should have included in such return ; or

(c) makes any false return or false entry in any return made under this Act,

and thereby evades or attempts to evade tax or assists any other person to evade or to attempt to evade tax shall be guilty of an offence under this Act, and shall be liable, after summary trial before a Magistrate, to a fine consisting of-

(a) fails to apply for registration as required under section 10; or

(b) fails to notify the Commissioner-General of any matters required to be notified under section 19; or

(c) fails to issue tax invoices as required by section 20; or

(d) issues more than one tax invoice for each taxable supply; or

(e) issues a tax invoice where such person is not entitled to issue such tax invoice under section 20 ;

(f) fails to furnish a return under section 21 or comply with a notice under section 21 ; or

(g) having appeared before an officer of the Department of Inland Revenue in compliance with a notice issued to him under section 21 or section 34 fails, without sufficient cause, to answer any question lawfully put to him by an officer acting under this Act; or

(h) gives any incorrect information relating to any matter or thing affecting his own liability to tax or the liability of any other person ; or

(i) permits the payment to any other person, other than the Commission-General of any amount to be paid under section 44 ; or

(j) knowingly fails to make any deduction required under section 60 or fails to comply with the provisions of section 60 ; or

(k) willfully obstructs or delays the Commissioner General or any other officer in the exercise of his power under section 63 or 64 ; or

(l) fails to maintain records as required under section 65,

(m) not being a person registered under this Act, issues a tax invoice,

shall be guilty of an offence under this Act, and shall be liable, on conviction after summary trail before a Magistrate, to a fine not exceeding ten thousand rupees, or to imprisonment of either description for a term not exceeding six months or to both such fine and imprisonment.

(1) The Commissioner-General shall be in charge of the administration of this Act, assisted by such number of Commissioners of Inland Revenue, Deputy Commissioners of Inland Revenue, Senior Assessors of Inland Revenue, Assessors of Inland Revenue and Tax Officers of Inland Revenue as may be necessary.

(2) The Commissioner-General may authorize any Commissioner or Deputy Commissioner to exercise, perform or discharge any power, duty or function which is conferred or imposed on or assigned to, the Commissioner-General by this Act.

(3) A Commissioner or a Deputy Commissioner of Inland Revenue exercising, performing or discharging any power, duty or function conferred or imposed on, or assigned to, the Commissioner-General by any provision of this Act shall be deemed for all purposes to he authorized to exercise, perform or discharge that power, duty or function, until the contrary is proved.

(4) A Commissioner of Inland Revenue or a Deputy Commissioner of Inland Revenue may exercise, perform or discharge any power, duty or function conferred or imposed on, or assigned to an Assessor by this Act.

(1) Every person who is or has been employed or Official Secrecy, engaged in carrying out or in assisting any person in carrying out the provisions of this Act shall preserve and aid in preserving secrecy with regard to all matters relating to the affairs of any person that may come to his knowledge in the performance of his duties under this Act, and shall not communicate any such matter to any person other than the person to whom such matter relate or to the Minister or to the Secretary to the Ministry of the Minister incharge of the subject of Finance or suffer or permit any person to have access to any records in the possession, custody or control of the Commissioner-General

(2) Every person employed in carrying out the provisions of this Act shall, before acting under this Act, and the Minister and the Secretary to the Ministry of the Minister in charge of the subject of Finance shall before acting under this Act take and subscribe before a Justice of the Peace an oath of secrecy in the prescribed form,

(3) No person employed in carrying out the provisions of this Act shall be required to produce in any court any return, document or to divulge or communicate to any court any matter or thing coming to his notice in the performance of his duties under this Act, except as may be necessary for the purpose of carrying into effect the provisions of this Act or any other written law administered by the Commissioner-General.

(4) Notwithstanding anything contained in this section any officer of the Department of Inland Revenue may communicate any matter which comes to his knowledge in the performance of his duties under this Act to any other officer of the Department if the communication is necessary for the performance of any duty under this Act or under any other written law administered by the Commissioner-General and the Commissioner-General may, notwithstanding anything in the Evidence Ordinance relating to the proof of documents, produce or cause to be produced in any Court, in any proceedings under this Act, a copy of any return or document received by him or in his possession under this Act or under any other written law administered by him and certified by him or on his behalf to be a correct copy :

Provided that the Commissioner-General may produce or cause to be produced the original of any such return or document in any case where it is necessary to prove the handwriting or the .signature of the person who wrote, made. signed or furnished such return or document, but only for the purpose of such proof :

Provided, further that the Commissioner-General shall not in any case be compelled to produce in any court either the original of such document or return or copy of any particulars contained in such document or return.

(5) Notwithstanding anything contained in this section the Commissioner-General may permit the Auditor-General or any officer of the Department of the Auditor-General duly authorized by him in that behalf to have access to any records or documents as may be necessary for the performance of his official duties. The Auditor-General or any officer authorized by him under this section shall be deemed to be a person employed in carrying out the provision of this Act for the purposes of subsection (2) of this section.

(6) Notwithstanding anything contained in this section where it appears to the Commissioner-General from any matter which comes to his knowledge in the performance of his duties under this Act, that any person has committed an offence under the Customs Ordinance or the Excise Ordinance or Excise (Special Provisions) Act, No. 13 of 1989, he may communicate with or deliver to the Commissioner of Excise or the Director-General of Customs as the case may be, any information relating to the commission of the offence or any articles, books of accounts or any other documents necessary or useful for the purpose of proving the commission of such offence.

(1) The Minister may make regulations to give effect to the principles and provisions of this Act.

(2) Every regulation made by the Minister shall come into operation on the date of its publication in the Gazette or on such date as may be specified in the regulation.

(3) Every regulation shall as soon as convenient after its publication in the Gazette, be brought before Parliament for approval. Any such regulation which is not so approved shall be deemed to be rescinded us from the date of disapproval but without prejudice to anything previously done thereunder. A Notification of the date on which a regulation is deemed to be rescinded shall he published in the Gazette.

(1) Every person whose turnover under the Turnover Tax Act, No. 69 of 1981, for any quarter in the period of twelve months ending six months immediately proceeding the appointed date exceeds two hundred thousand rupees shall if such person is carrying on or earring out a taxable activity on such appointed date, be deemed to be a registered person for the purposes of this Act and the provisions of this Act shall apply to such person accordingly.

(2) Any person who is deemed to be a registered person under subsection (1) may make a statement of objection, in writing to the Commissioner-General within thirty days of the receipt of the notice of such registration, indicating that his taxable supplies for the period specified in subsection (1) do not exceed the amount specified in section 10.

(3) Where the Commissioner-General is satisfied with the statement he may cancel such registration notwithstanding the provisions of section 16.

(a) tax paid on the supply to a registered person of any goods or services to be used by such person in carrying on or carrying out a taxable activity ;

(b) tax paid by him on the importation of goods which are used by such person for the purpose of making taxable supplies ;

(a) any activity carried out as a business, trade, profession or vocation other than in the course of employment or every adventure or concern in the nature of a trade ;

(b) the provision of facilities to its members or others for a consideration and the receipt of subscription in the case of a club, association or organization ;

(c) anything done in connection with the commencement or cessation of any activity or provision of facilities referred to in (a) or (b);

(d) the hiring or leasing of any movable property or the renting or leasing of any immovable property ;

(e) the exploitation of any intangible property such as patents, copyrights or other similar assets;

" taxable supply " means any supply of goods or services made or deemed to be made in Sri Lanka which is chargeable with tax under this Act and includes a supply charged at the rate of zero per cent other than a exempt supply.