The chairman of state-owned textile retailer Lanka Salusala Limited has been released on bail over the company’s failure to remit value added tax owed to the government, Hiru News reported.
Colombo Additional Magistrate Oshada Migara Maharachchi released chairman Dinuk Wijesinghe on a surety bail of Rs. 500,000 when the case was called on Monday.
The case was filed by the Commissioner General of Inland Revenue, naming the chairman of Lanka Salusala as respondent, and alleges that the company defaulted on value added tax payments across a seven-year period from 2017 to 2023.
Rs. 45 million in arrears
Appearing for the Commissioner General, lawyer Dinesh Perera told the court that the institution had defaulted on Rs. 45 million in tax, that the defaults ran through the years 2017 to 2023, and that the respondent institution had been notified regarding the payment.
Counsel for the chairman told the court that discussions are under way with the General Treasury on settling the arrears and that steps are being taken toward payment. He said arrangements were planned to submit a Cabinet paper to obtain the funds needed to clear the tax bill.
The magistrate, considering submissions from both sides, ordered that the progress of the tax payment be reported to court on December 17 and released the respondent on bail.
Context
Lanka Salusala is a long-established state-owned retailer of textiles and garments, with outlets around the country. The proposal to seek Cabinet approval for funds to pay the arrears points to a company unable to settle the liability from its own cash flow — a pattern common among loss-making state enterprises, whose arrears to the Inland Revenue Department have drawn repeated audit attention.
Prosecuting the chairman personally as respondent, rather than pursuing the company alone, is the mechanism available to the Commissioner General under the VAT Act where a corporate taxpayer defaults.
Hiru did not report how much of the Rs. 45 million relates to each year, whether any part has been paid, or whether the Treasury has agreed to fund the settlement. As of early Tuesday, no other verified Sri Lankan newsroom had published its own report of the proceedings.
