KATHMANDU, Nov 22: Making public the full text of its judgment, the Supreme Court on Thursday said Ncell, the private sector telecom service provider, has a remaining capital gains tax (CGT) liability of only Rs 21.10 billion. 

Stating that the company had already cleared Rs 23.57 billion of the total Rs 62.63 billion in CGT, the apex court said it will be free of further CGT liability after it pays the remaining Rs 21.10 billion under this head to the Large Taxpayers Office (LTO).

A five-member larger full bench of Justices Tej Bahadur KC, Purushottam Bhandari, Dambar Bahadur Shahi, Sushma Lata Mathema and Manoj Kumar Sharma reduced by half the CGT determined by the LTO on April 16, 2019. It said the tax determination was groundless and invoked Section 120 (A) of the Tax Act, 2002 for its finding.

Although Justice Mathema wrote a dissenting opinion in favor of no tax reduction and cited interest liabilities as per the transactions, she went along with the decision of the other justices.

The apex court ruling came in response to a fresh writ petition filed by Ncell, challenging the LTO’s tax determination of April 16, 2019. LTO had determined that Ncell owed Rs 39.6 billion in line with the apex court order on February 7, 2019.

Stating that the LTO determined the tax without any concrete grounds for doing so, the apex court invoked Section 120 (A) of the Tax Act, 2002 for waiving 50 percent of the tax sought by LTO. The apex court said the tax initially assessed by the LTO on June 12, 2017 needed to be paid by Ncell.

Stating that the LTO determined Rs 39.6 billion as the remaining amount to be paid following the apex court order of February 7, 2019, the telecom service provider had moved the apex court arguing that it need not pay such a huge amount because it had already paid up.

On February 7, the apex court had directed Ncell and Axiatia to pay Rs 62 billion in CGT, pointing out that Malaysian company Axiata had bought Reynolds Holdings, which held a majority share in Ncell, from TeliaSonera for $1.03 billion. Reynolds Holdings had appreciated to over Rs 105 billion in April 2015. It was a wholly-owned subsidiary of TeliaSonera believed to be registered in the tax haven of Saint Kitts and Nevis and it had evaded a huge amount of tax it needed to pay the government of Nepal.

Ncell had deposited Rs 23.57 billion in two installments as applicable tax on the profit generated through the sale of the telecom company. It paid Rs 9.97 billion in May, 2016 on the basis of its own calculations. It again paid Rs 13.60 billion on June 4, 2017, following intense pressure and criticism from civil society.

 
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