KATHMANDU, June 15: Parliament’s Finance Committee has asked the government to immediately amend Tax Settlement Commission Act 1976 saying it has become outdated and caused huge losses to the state coffers. 

The committee’s meeting on Thursday directed the government to immediately start the process to amend the Panchayat-era law and update it in line with the changed times and context. 

All the lawmakers except for Former Finance Minister Ram Sharan Mahat present at the meeting questioned the tax settlements made by the commission led by Lumba Dhwaj Mahat. Director General of Inland Revenue Department Chudamani Sharma, who is also a member of the commission, has been arrested by the Commission for the Investigation of Abuse of Authority, which is investigating the issue, as the tax settlement in hundreds of cases were found suspicious.

The then finance minister Mahat had formed the commission which submitted its report to the government in December 2015.

Lawmakers demanded amdendment to the law saying that some of its provisions have given absolute powers to the commission, for instance, no one can question the commission’s decisions and its reports should be kept secret. Lawmakers said such provisions are unacceptable and outdated in the present context.

The key purpose of the commission is to settle pending disputes related to tax payment. It can even look into the cases that are being discussed at court or in special judicial authorities dealing with tax issues. 

The Office of the Auditor General in its 54th report unveiled in April disclosed that the commission whittled down tax liabilities amounting to Rs 30.52 billion to Rs 9.54 billion and pinpointed several undisputed and very recent taxes were also unnecessarily settled by the commission.

Lawmaker Bidur Sapkota demanded that the committee ask the authorities to submit the commission’s report and find out the names of  the companies whose taxes were settled by the commission in violation the norms.

Similarly, Lawmaker Jagadishwar Narsingh K C said the figures of the disputed tax settled by the commission is very high and accused the commission of favoring several firms.

Several lawmakers stressed the need for amending the law barring formation of such commission until the law is updated and make the commission accountable to the government. C P Mainali said: “The unlimited rights have made it authoritarian.”
Former finance minister Mahat however defended the commission saying it was formed for settling the chronic cases of the tax disputes and also increase the revenue collection by doing so as per international standards. 

Mahat also accused the media and others of being too negative against him by overlooking the important reforms he carried out like increasing the volume in income tax collection and introducing Value Added Tax (VAT).

The also directed the CIAA to investigate the tax settlements and also take action against those found involved in misappropriation.

“Staffs in government offices should be transferred every two years as stated in the law,” reads a decision of the parliamentary committee. The decision was made to stop cases of people remaining in the same post for a long time and influencing decisions -- like that of Inland Revenue Department DG Sharma -- from becoming a trend. Sharma had remained in the post for at least four years.

 
• tax settlement law