The Supreme Court (SC) has calculated the revoked late fine component of the capital gain tax determined by the Large Taxpayers Office against telecom service provider Ncell to be Rs 17.95 billion.
A full bench of Justices Tej Bahadur KC, Purushottam Bhandari, Dambar Bahadur Shahi, Sushma Lata Mathema and Manoj Kumar Sharma on August 26, 2019 had ordered that the fine component on the determined amount should not be recovered from Ncell.
Justice Mathema has submitted different opinion on that though. Mathema has agreed on all the things in the verdict and said she has a different opinion only in the style of explaining the question of whether the order should be as demanded by the applicant or not.
"The verdict has come in consensus of the majority opinion on explaining the three questions in the main verdict. I have presented a different opinion as I cannot agree with the style of presentation while explaining the third question even as I agree with the interpretation and explanation of the three questions," Mathema has written.
The Large Taxpayers Office had determined that Ncell must pay Rs 62.63 billion in capital gain tax including interest and late fine, and stated that Ncell need to pay Rs 39.06 billion more. The full judgement released by the SC has now calculated the waived late fine component of the capital gain tax to be Rs 17,956,713,000, and stated that Ncell should only pay Rs 21,103,971,000 more.
The full bench on August 26 ordered that the fine component on the determined amount should not be recovered from Ncell. The SC had also revoked the writ petition filed by Ncell against the Large Taxpayers Office. "The amount determined by the Large Taxpayers Office on April 16 has been revoked so far as the fee levied on the applicant as per clause 120(a) as it seems to be against the clause since the tax liability on Axiata Ncell was created only after the court imposed the liability of capital gain tax on Axiata Ncell and ruled that it should be recovered from the company. The claims of the applicant on other issues, apart from that, has been revoked," the SC verdict on August 26 stated.
Ncell had filed the petition against the tax determination a day before the seven-day deadline issued by the Large Taxpayers Office to pay the capital gain tax expired.
The Taxpayers Office on April 16 had determined that Ncell should pay Rs 39.06 billion more in capital gain tax. It had sent a notice to Ncell to pay the tax within seven days.
Ncell, that had already deposited Rs 23.57 billion in two installments, had claimed that it should pay only Rs 14.365 billion more. It had pointed that the SC has just ordered to recover capital gain tax, and not interest and late fine. It added that it should pay 25 percent of the capital gain of Rs 143.65 billion during the sale which comes out at Rs 35.91 billion.
It had contended that it, therefore, should pay only Rs 14.365 billion more as it has already deposited Rs 23.57 billion.
Swedish-Finnish company TeliaSonera has not paid capital gain tax for sale of its 80% stake in Ncell to Malaysian company Axiata in April 2015.
The Large Taxpayers Office earlier had determined that TeliaSonera had made capital gain of Rs 143.65 billion during the sale.
The extended full bench of Supreme Court (SC) headed by Cholendra Shumsher Rana on February 6 had ordered that the capital gain tax be recovered from Ncell and Axiata.
The Large Taxpayers Office issuing a notice after that had determined that Ncell must pay Rs 62.63 billion in capital gain tax including interest until now. It had told Ncell to pay the remaining Rs 39.06 billion within seven days.
The full bench including Justices Meera Khadka, Bishwambhar Shrestha, Ananda Mohan Bhattarai and Tanka Moktan hearing a petition filed by Dwarika Nath Dhungel demanding the capital gain tax be recovered from Ncell on February 6 had issued a mandamus ruling that Ncell and Axiata should pay the tax.
The mandamus reasoned that Ncell has to pay capital gain tax to the Nepal government despite TeliaSonera selling the shares to Axiata as its business is based in Nepal.
The full judgement of the mandamus published on April 9 had ordered the government to recover the tax from the telecommunication company and its majority shareholder Axiata within three months.
Malaysian company Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from the Swedish-Finnish company TeliaSonera in April 2016.
Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis, a tax haven. Though capital gains tax needs to be paid by the company that gains from the deal, TeliaSonera has already exited Nepal.
Ncell has already deposited Rs 23.57 billion in two installments as tax applicable on the profit generated through sale of the telecom company. It had first paid Rs 9.97 billion in May, 2016 in tax return based on its own calculations. It had then paid Rs 13.60 billion on June 4, 2017 bowing to intense pressure and criticisms from a cross section of the society
