KATHMANDU, May 8: The Department of Revenue Investigation (DRI) has filed a lawsuit against a construction company, demanding nearly Rs 1.2 billion in damages on charges of tax evasion.
The DRI filed a case worth Rs 1.2 billion at the High Court Patan against Dhruba Construction Pvt Ltd, which deals in contracts, consultancy services, and the buying and selling of construction materials. The DRI stated that it has demanded the recovery of Rs 1.209 billion from the company’s director, Dhrubadev, along with imprisonment.
According to the DRI, it has determined a shortfall of Rs 458 million in value-added tax (VAT) and Rs 146.5 million in income tax. As per sub-section 1 of section 23 of the Act, it has demanded the recovery of this amount along with a 100 percent penalty of Rs 604.6 million, totaling Rs 1.2 billion, and imprisonment under section 23 of the Act.
DRI raids Thamel-based LOD club suspecting tax evasion, seizes...
Investigations revealed that the company’s director, Dev, based in Kathmandu Metropolitan City-31 in New Baneshwor, issued invoices without transferring goods and services.
The DRI filed the case after finding that the company failed to make payments for purchases through banking channels, did not issue invoices sequentially, failed to submit VAT and income tax returns, and submitted false statements for VAT and income tax.
The company also could not verify the source of its purchases and failed to pay VAT and income tax as per the law. Based on these offenses, the DRI filed a charge sheet under section 3 of the Revenue Leakage (Investigation and Control) Act, 2052.
The DRI has been filing cases related to revenue leakage, foreign exchange misuse, gold smuggling, and customs evasion. It continues to investigate and bring legal action against major financial crimes such as tax evasion, customs fraud, and foreign exchange manipulation. The DRI investigates high-risk sectors for tax evasion and economic crimes and files related cases.
Similarly, the DRI, under the Prime Minister and Council of Ministers Office, has been criticized for inefficiency. A high-level economic reform recommendation commission, chaired by former Finance Secretary Rameshwar Khanal, recommended that the DRI be dissolved. The commission suggested restructuring the Revenue Tribunal, assigning tax investigation duties to other state agencies, and scrapping the DRI.
The recommendation commission argued that investigations into foreign exchange misuse naturally fall under money laundering offenses. It stated that the Department of Money Laundering Investigation could handle such cases and that agencies responsible for non-tax revenue collection should also be responsible for controlling leakage in their areas.
Likewise, the recommendation commission suggested transferring internal revenue-related cases to the Inland Revenue Department, customs-related cases to the Customs Department, and foreign exchange misuse cases to the Department of Money Laundering Investigation. It also noted that the Inland Revenue Department could monitor whether goods exempted from customs reach their destinations and manage the online system.
