ACT, No. 14 OF 2014

14of2014.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
—————————
DEFAULT TAXES (SPECIAL PROVISIONS)
(AMENDMENT) ACT, No. 14 OF 2014
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[Certified on 24th April, 2014]
Printed on the Order of Government
—————————
Published as a Supplement to Part II of theGazette of the Democratic
Socialist Republic of Sri Lanka of April 25, 2014.
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Default Taxes (Special Provisions) (Amendment) 1
Act, No. 14 of 2014
[Certified on 24th April, 2014]
L. D- O. 12/2014.
ANACT TO AMEND THE DEFAULT TAXES (SPECIAL PROVISIONS) ACT,
NO. 16 OF 2010
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows:-
1. This Act may be cited as the Default Taxes (Special Short title.
Provisions) (Amendment) Act, No. 14 of 2014 .
2. Section 10 of the Default Taxes (Special Provisions) Amendment of
Act, No. 16 of 2010 (hereinafter referred to as the “principal section 10 of
Act, No. 16 of
enactment”) is hereby amended as follows:-
2010.
(1) by re-numbering section 10 of that section as
subsection (1) thereof ; and
(2) by the addition immediately after re- numbered
subsection (1), of the following subsection :-
“(2) Where the Commissioner – General is
satisfied that immediate action is necessary for
the recovery of a tax in default, he may, instead
of instituting an action under subsection (1), take
the steps stipulated in sections 10A, 10B, 10C,
10D, 10E, 10F and 10G of this Act.”.
3. The following new sections are inserted immediately Insertion of
after section 10 of the principal enactment and shall have Sections 10A,
10B,
effect as sections 10A, 10B, 10C, 10D, 10E, 10F and 10G of
10C,10D,10E ,
that enactment:- 10F and 10G in
the principal
“Where 10A. (1) Where the Commissioner- General enactment.
immediate decides to take steps in terms of subsection (2)
action for
of section 10, to recover any tax in default he
recovery of
tax in default shall within fourteen days of the date on which
is necessary. he takes such steps , issue a notice to the
2—PL 008084—2,900 (03/2014)
2 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
defaulter stating the particulars of the tax in
respect of which such steps have been taken
and the nature of the steps taken.
(2) Where there is an appellate procedure
against the assessment or assessments made
under the relevant law, under which the tax in
default is charged and the defaulter has not
appealed within the proper time under that law
against such assessment or assessments , he
may within thirty days of the notice issued
under subsection (1), make any objection to
the tax so charged and the Commissioner-
General shall, consider such objection and give
his decision thereon which shall be final:
Provided that, where the Commissioner-
General is satisfied that owing to illness,
absence from Sri Lanka or other reasonable
cause, the defaulter was prevented from
objecting within thirty days of the notice
issued under subsection (1), he shall grant an
extension of time for preferring such
objections.
(3) Where the tax recovered as a result of
any steps taken under subsection (1), is in
excess of the amount of tax determined under
subsection (2), to be payable by the defaulter
in respect of any year of assessment, such excess
shall be refunded to the defaulter:
Provided that, no refund under this
subsection shall exceed the tax recovered as a
result of steps taken under subsection (1).
Recovery of 10B. (1) Where a body corporate has not
tax from paid any tax on or before the due date, as
principal
officers and required by the relevant law under which such
others. tax in default is charged, it shall be lawful for
Default Taxes (Special Provisions) (Amendment) 3
Act, No. 14 of 2014
the Commissioner-General to proceed under
section 10A, 10B, 10C,10D,10E, 10F or 10G
of this Act against the manager, secretary, any
director or any other principal officer of such
body corporate, as if such manager, secretary,
director or principal officer, as the case may
be, is responsible for such default, unless such
manager, secretary, director or principal
officer, as the case may be, proves the contrary
to the satisfaction of the Commissioner-
General, notwithstanding anything in any other
written law relating to such body corporate.
(2) Where an unincorporated body of
persons has not paid any tax on or before the
due date, as required by the relevant law under
which the tax in default is charged, it shall be
lawful for the Commissioner-General to
proceed under section 10A, 10B, 10C,10D,
10E, 10F or 10G of this Act against any partner
or office bearer of such unincorporated
body of persons as if he is responsible for
such default, unless such partner or office
bearer, as the case may be, proves the contrary
to the satisfaction of the Commissioner-
General, notwithstanding anything in any
other written law.
Recovery 10C. (1) The Commissioner-General may
of tax by appoint persons to be tax collectors under this
seizure
Act .
and sale.
(2) (a) Where any tax is in default under
section 2 of this Act, the Commissioner-General
may issue a certificate to a Government Agent,
Assistant Government Agent, Fiscal, Deputy
Fiscal or tax collector, containing particulars
of such tax and the name of the defaulter and
the officer to whom such certificate is issued
4 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
shall be empowered and is hereby required, to
cause the tax to be recovered from the defaulter
named in the certificate by seizure and sale of
his movable property.
(b) A seizure of movable property shall be
effected in such manner as such officer shall
deem most expedient in that behalf and as soon
as any movable property is seized by such
officer, a list of such property shall forthwith
be made and signed by him and shall be given
to the defaulter and a copy thereof furnished to
the Commissioner-General.
(c ) Where the property so seized is –
(i) cash in Sri Lankan currency, such
cash shall be first applied in the
payment of the cost and charges
of seizure and any balance
applied in satisfaction of the tax
in default;
(ii) cash in foreign currency, such
cash shall be deposited in the
Central Bank or any commercial
bank and the proceeds therefrom
applied to the payment of the
costs and charges of seizure and
any balance applied in
satisfaction of the tax in default;
and
(iii) property other than cash, such
property shall be kept for five
days at the cost and charges of
the defaulter. If the defaulter does
not pay the tax in default
together with the costs and
Default Taxes (Special Provisions) (Amendment) 5
Act, No. 14 of 2014
charges within the five days, the
Government Agent, Assistant
Government Agent, Fiscal,
Deputy Fiscal or tax collector
shall cause such property to be
sold by public auction, or where
such property is a negotiable
instrument or a share in any
corporation or public company,
to be sold through a broker at the
market rate of the day.
(d) The sum realized by a sale
referred in sub-paragraph (iii) of
paragraph (c ) shall be applied –
(i) firstly, in payment of the
costs and charges of
seizing, keeping and
selling of property; and
(ii) secondly, in satisfaction of
the tax in default, and any
balance shall be paid to the
owner of the property
seized.
(e) It shall be lawful for any officer
to recover from any defaulter,
reasonable expenses incurred by
him in proceeding against such
defaulter under this section,
notwithstanding that no seizure
of property was effected.
(f) In this subsection the expression
“movable property” includes any
plant or machinery affixed to the
ground of a factory.
6 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
(3) Where any tax is in default and the
Commissioner-General is of the opinion that
the recovery by the means provided in
subsection (2) is impracticable or inexpedient,
he may issue a certificate to a District Court
having jurisdiction in any district where the
defaulter resides or in which any property,
movable or immovable, owned by the defaulter
is situated, containing particulars of such tax
and the name or names of the person or persons
by whom the tax is payable, and the courts
shall thereupon direct a writ of execution to
issue to the Fiscal, authorizing and requiring
him to seize and sell all or any of the property,
movable and immovable, of the defaulter, or
such part thereof as he may deem necessary for
recovery of the tax, and the provisions of
sections 226 to 297 of the Civil Procedure Code
(Chapter 101) shall, mutatis mutandis, apply
to such seizure and sale.
(4) Wherever the Commissioner-General
issues a certificate under this section, he shall
at the same time issue to the defaulter, whether
resident or non-resident, a notification thereof
by personal service, registered letter sent
through the post or telegraph; but the non-
receipt of such notification by the defaulter
shall not invalidate proceedings under this
section.
Proceedings 10D. (1) Where the Commissioner-
for recovery
General is of the opinion in any case that
before
Magistrate. recovery of tax in default by seizure and sale is
impracticable or inexpedient, or where the full
amount of the tax has not been recovered by
seizure and sale, he may issue a certificate
containing particulars of such tax and the name
and last known place of business or residence
Default Taxes (Special Provisions) (Amendment) 7
Act, No. 14 of 2014
of the defaulter, to a Magistrate having
jurisdiction in the division in which such
place is situated. The Magistrate shall
thereupon summon such defaulter before him
to show cause why further proceedings for the
recovery of the tax should not be taken against
him, and in default of sufficient cause being
shown the tax in default shall be deemed to be
a fine imposed by a sentence of the Magistrate
on such defaulter for an offence punishable
with fine only or not punishable with
imprisonment, and the provisions of subsection
(1) of section 291 (except paragraphs (a), (d)
and (i) thereof) of the Code of Criminal
Procedure Act, No. 15 of 1979 relating to
default of payment of a fine imposed for such
an offence shall thereupon apply, and the
Magistrate may make any direction which, by
the provisions of that subsection, he could have
made at the time of imposing such sentence.
(2) The correctness of any statement in a
certificate issued by the Commissioner-General
for the purposes of subsection (1), shall not be
called in question or examined by the
Magistrate in any proceeding under this section
and accordingly, nothing in that subsection
shall be read and construed as authorizing a
Magistrate to consider, or decide the
correctness of any statement in such certificate
or to postpone or defer such proceeding for a
period exceeding thirty days, by reason only
of the fact that an appeal is pending against
the assessment, in respect of which the tax in
default is charged.
(3) Nothing in subsections (2) to (5) of
section 291 of the Code of Criminal Procedure
Act, No. 15 of 1979, shall apply in any case
referred to in subsection (1) of this section.
8 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
(4) In any case referred to in subsection (1)
in which the defaulter is sentenced to
imprisonment in default of payment of the
fine deemed by that subsection to have been
imposed on him, the Magistrate may allow time
for the payment of the amount of that fine or
direct payment of that amount to be made in
instalments.
(5) The Court may require bail to be given
as a condition precedent to allowing time under
subsection (1) for showing cause as therein
provided, or under subsection (4) for the
payment of the fine; and the provisions of
Chapter XXXIV of the Code of Criminal
Procedure Act, No. 15 of 1979, shall apply,
where the defaulter is so required to give bail.
(6) Where a Magistrate directs under
subsection (4) that payment be made in
instalments and default is made in the payment
of any one instalment, proceedings may be
taken as if default had been made in payment
of all the instalments then remaining unpaid.
(7) In any proceeding under subsection
(1), the Commissioner-General’s certificate
shall be sufficient evidence that the tax has
been duly assessed and is in default, and any
plea that the tax is excessive, incorrect, or under
appeal, shall not be entertained.
(8) Where the tax default referred to in this
section is made by a body corporate , or an
unincorporated body of persons, the manager,
secretary, any director or any other principal
officer of such body corporate, or any partner
or office bearer of such unincorporated body
of persons, as the case may be, in addition to a
Default Taxes (Special Provisions) (Amendment) 9
Act, No. 14 of 2014
fine imposed by a sentence of the Magistrate
under this section, shall be liable on
conviction after summary trial before the
Magistrate, to an imprisonment of either
description for a period not exceeding three
months:
Provided that, the Magistrate may allow
such manager, secretary, any director or any
other principal officer of such body corporate,
or any partner or office bearer of such
unincorporated body of persons, as the case
may be, to show cause that he is not responsible
for such default or that he has taken all
necessary steps within his power to avoid the
default of such tax.
Recovery of 10E. (1) Where tax payable by any person
tax out of under any of the laws specified in the Schedule
debts & c.
to this Act is in default and the Commissioner-
General is of the opinion that recovery of tax
in default in terms of sections 10A, 10B,10C
and 10D is impracticable or inexpedient and it
also appears to him to be probable that any
other person –
(a) owes or is about to pay money to the
defaulter or his agent;
(b) holds money for or on account of the
defaulter or his agent;
(c) holds money on account of some other
person for payment to the defaulter or
his agent; or
(d) has authority from some other person to
pay money to the defaulter or his agent,
10 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
the Commissioner-General may give to such
other person notice in writing (a copy of which
shall be sent by post to the defaulter) requiring
him to pay any such moneys not exceeding
the amount of the tax in default, to the officer
named in such notice. The notice shall apply
to all such moneys which are in his hands or
due from him at the date of receipt of such
notice, or come into his hands or become due
from him or are about to be paid by him at any
time within a period of three months, after the
date of such notice.
(2) Where a person holds money for or on
account of the defaulter and any other person
or persons jointly (in this section referred to
as the “joint account holder or holders”) the
Commissioner-General may give a notice
under subsection (1) to such person, requiring
him to pay the amount of the tax in default or
part thereof to the officer named in such notice,
out of the monies or such part of such moneys
in the joint account which the Commissioner-
General is satisfied is attributable to the
contributions made by the defaulter, and is so
certified by the Commissioner-General:
Provided that –
(a) every person remitting money in
compliance with a notice issued
under subsection (1), shall intimate
such fact to every other joint account
holder;
(b) every joint account holder other than
the defaulter may, within two weeks
of the date on which he received an
intimation under paragraph (a),
Default Taxes (Special Provisions) (Amendment) 11
Act, No. 14 of 2014
make a claim to the Commissioner-
General in respect of any part of such
remittance which represents his net
contribution to the balance in such
joint account as at the date of notice
issued by the Commissioner-
General, and the Commissioner-
General shall consider such claim
and make his order thereon;
(c) every joint account holder who is
aggrieved by the order of the
Commissioner-General made under
paragraph (b), may institute an
action in the District Court seeking
an order for the recovery of such
money or part of such money which
he claims to be attributable to the
contributions made by him.
(3) Notwithstanding any provision in the
Prescription Ordinance (Chapter 68), no action
shall be instituted for the recovery of such
money or part of such money after the
expiration of three months from the date of
notice issued by the Commissioner-General.
(4) Any person who has made any
payment in pursuance of this section shall be
deemed to have acted under the authority of
the defaulter, and of all other persons
concerned, and hereby indemnified in respect
of such payment against all proceedings, civil
or criminal, notwithstanding the provisions of
any written law, contract or agreement.
(5) Any person to whom a notice has been
given under subsection (1), who is unable to
comply therewith owing to the fact
12 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
thatnomoneys referred to in that subsection
have come into his hands or that no such
moneys have become due from him within the
period referred to in that subsection, shall
within fourteen days of expiration thereof, give
notice in writing to the Commissioner-General
apprising him of the facts.
(6) Where any person to whom a notice
has been given under subsection (1), is unable
to comply therewith and has failed to give
notice to the Commissioner-General as
provided in subsection (5), or where such
person has deducted or could have deducted
the tax to which the notice relates or any part
thereof, and has not paid over, as required by
the Commissioner-General the amount of such
tax or part thereof within fourteen days after
the expiration of the period referred to in
subsection (1), such person shall, if he is an
individual be liable, or where such person is a
company or body of persons whether corporate
or unincorporated, the secretary, manager or
other principal officer of such company or
body shall be personally liable, for the whole
of the tax which such person has been required
to deduct, and such tax may be recovered from
such individual, secretary, manager or other
principal officer, as the case may be, by any of
the means provided in this Act.
(7) For the purpose of this section, the
expression “defaulter” shall be deemed to
include the agent of a person who is in default
and the provisions of this section shall apply
in any case where the tax which would have
been payable by any person if he were alive is
Default Taxes (Special Provisions) (Amendment) 13
Act, No. 14 of 2014
in default; and for the purposes of the
application of those provisions in any such
case, the expression “defaulter” in subsection
(1) means –
(a) the executor or administrator of a
deceased person;
(b) any person who takes possession of or
intermeddles with, the property of a
deceased person; or
(c) any person who has applied or is
entitled to apply to a District Court for
the grant or resealing of a probate or
letters of administration, in respect of
the estate of a deceased person .
Transfer of 10F. (1) Any person liable to pay tax in
immovable default under any of the laws specified in the
property to
Schedule to this Act , may apply to the
Government
in lieu of Commissioner-General to transfer any
payment of immovable property owned by such person to
tax in cash. the Government, in lieu of payment of such
tax in cash at such value as is placed on such
property by agreement between such person
and the Commissioner-General, and the
Commissioner-General may allow such
application having regard to the feasibility of
managing such property after it is transferred
to the Government.
(2) Where the Commissioner-General
allows an application made under subsection
(1), and the amount agreed to in accordance
with the provisions of that subsection as the
value of the property in respect of which the
application is made, exceeds the amount of
tax payable by the applicant, the excess shall
14 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
be deemed to be a donation within the meaning
of paragraph (b) of subsection (2) of section 34
of the Inland Revenue Act, No. 10 of 2006,
made to the Government of Sri Lanka by the
applicant.
Tax in 10G. (1) The Commissioner-General may,
default to be by notice in writing given to any employer of
recovered
an employee or to the person responsible for
from
remuneration the payment of remuneration of an employee,
of direct such employer or person to deduct during
employees. such period as may be specified in such notice,
from the remuneration of such employee, the
amount of tax in default payable by such
employee , in such number of monthly
instalments as may be specified in such notice.
The amount so deducted in each month from
the remuneration of an employee shall be paid
to the Commissioner-General by such employer
or such person, as the case may be.
(2) Where any tax is deducted under
subsection(1) from the remuneration of an
employee by his employer or by the person
responsible for the payment of such
remuneration, such employee shall for the
purposes of this Act, be deemed to have paid
such tax or part thereof on the date on which
the deduction is made.
(3) The Commissioner-General may at any
time after he has made a direction under
subsection (1), withdraw such direction wholly
or partly by notice given in writing to the
employer or the person responsible for the
payment of the remuneration of the employee,
if the employee has made arrangements to the
satisfaction of the Commissioner-General, for
the payment of his tax in default.
Default Taxes (Special Provisions) (Amendment) 15
Act, No. 14 of 2014
(4) Where any employee from whose
remuneration any tax in default is to be
deducted under the preceding provisions of
this section by his employer or the person
responsible for the payment of such
remuneration, is about to leave or leaves his
employment, the employer or such person shall
deduct the whole amount of such tax or any
balance thereof which he has been directed to
deduct by the notice given to him by the
Commissioner-General, from all or any
payments payable by him to such employee,
after he becomes aware that such employee is
leaving , or has left, his employment.
(5) Where a direction for the deduction of
any tax from the remuneration of an employee
is given under subsection(1) to his employer
or to the person responsible for the payment of
such remuneration, and such employer or
person is unable to deduct the whole or any
part of such tax for the reason that such
employee has left his employment or for any
other reason, such employer or person shall
forthwith give notice in writing to the
Commissioner –General apprising him of the
facts of the matter, and any tax which such
employer or person has not deducted or cannot
deduct, shall immediately become payable by
the employee and be recovered by any of the
means provided under this Act.
(6) Where the employer or the person
responsible for the payment of remuneration
to an employee has failed to deduct from such
remuneration any tax which he has been
directed to deduct under subsection (1), and
such employer or person has failed to give
notice to the Commissioner-General as required
16 Default Taxes (Special Provisions) (Amendment)
Act, No. 14 of 2014
by subsection (5), within fourteen days of the
date on which such deduction should have been
made, or where such employer or person has
deducted or could have deducted tax in any
month from such remuneration in accordance
with a direction under subsection (1), but has
not paid the amount of such tax to the
Commissioner-General by the fifteenth day of
the following month, such employer or person,
if he is an individual, shall be liable, or where
such employer or person is a company or a
body of persons, whether corporate or
unincorporated, the secretary, manager or other
principal officer of such company or body shall
be personally liable, for the whole of the tax
which such employer or such person has been
directed to deduct under this section, and such
tax may be recovered from such individual,
secretary, manager or other principal officer
by any of the means provided in this Act, and
such tax shall be deemed to be in default.
(7) Every employer or other person who
deducts tax from the remuneration of any
employee in accordance with a direction under
subsection (1), shall on request made by such
employee, issue to him a certificate in such
form as is specified by the Commissioner-
General, of the amount of tax deducted.”.
Sinhala text to 4. In the event of any inconsistency between the Sinhala
prevail in case and Tamil texts of this Act, the Sinhala text shall prevail.
of inconsistency.

Default Taxes (Special Provisions) (Amendment) 17
Act, No. 14 of 2014
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