SC paves way to recover CGT from Sumargi

Published On: June 24, 2019 06:00 AM NPT By: Ananta Raj Luitel

KATHMANDU, June 24: The Supreme Court (SC) has refused to continue a stay order issued earlier on a writ petition filed by controversial businessman Ajeya Raj Sumargi, who had sought court order against the revised amount of capital gains tax (CGT) determined by the government on the sale of 75 percent stakes of his firm, Nepal Satellite Telecom. This has paved way for the government to recover the revised CGT.

A joint bench of justices Sushma Lata Mathema and Manoj Kumar Sharma on Sunday refused to continue the stay order, which was earlier issued by Justice Bam Kumar Shrestha, on a writ petition filed by the Nepal Satellite Telecom, a telecom company owned by Sumargi. Cyprus-based Airbell Services Limited had bought 75 percent stake of Nepal Satellite Telecom.

The government had in April determined Rs 4.31 billion in CGT for the seven-year-old sale of 75 percent stake of Sumargi's firm. He then moved the apex court after Inland Revenue Office, New Baneshwar, recently wrote to him to pay the outstanding taxes.

In his writ petition, Sumargi stated that he was subjected to injustice by determining such a large amount in CGT. Following a preliminary hearing on the writ petition on May 16, a single bench of Justice Bam Kumar Shrestha had issued a stay order against the government to stall the tax recovery process.

Sumargi had been dilly-dallying to pay the capital gains tax to the Inland Revenue Office, New Baneshwar following the stay order. Government officials said the refusal of the apex court to continue the stay order has paved the way to recover the CGT from Sumargi.

Alleging that the Satellite Telecom had “willfully defaulted” on capital gains tax to the government, the Inland Revenue Office in New Baneshwar in April had written to the company to settle the outstanding tax by April 24. As per clause 120 related to willfully defaulting tax, the government had determined that the Sumargi's company should pay a total of Rs 4.31 billion in capital gains tax and fines.

The tax office had also given him opportunity to put forth his arguments against the revised CGT amount. However, Sumargi had chosen not to accept the letter and decided to move the court on May 15 against the new tax amount.

The apex court on the following day had issue stay order against the government, making it easy to defer payment of tax to the government. With Sunday's decision, Sumargi will have to bear additional tax liability as fine amount is also included in the tax.

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