IN THE COURT OF APPEAL OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of a Case Stated under Section 170 of the Inland Revenue Act, No. 10 of

2006 as amended.

Asia Pacific Institute of Information Technology Lanka (Pvt) Ltd, No. 388, Union Place, Colombo 02.

Appellant Case No. CA/TAX/0024/2014 Tax Appeals Commission No. TAC/VAT/010/2013 Vs.

The Commissioner General of Inland Revenue, Department of Inland Revenue, Sir Chittampalam A.Gardiner Mawatha, Colombo 02. Respondent Before : Dr. Ruwan Fernando J. &

M. Sampath K.B. Wijeratne J.

Counsel : : Dr. Romesh de Silva, PC with Harsha Amarasekera, PC and Kanchana Pieris for the Appellant.

Milinda Gunatilleke, A.S.G. for the Respondent.

Argued on : 06.12.2022 & 12.01.2023 :

Written Submissions filed on : 17.03.2023 & 02.07.2018 by the Appellant)

16.03.2023 & 29.06.2018 (by the Respondent)

Decided on : 31.03.2023 Dr. Ruwan Fernando, J.

Introduction [1] This is an appeal by way of a case stated against the determination of the Tax Appeals Commission dated 03.04.2014 confirming the determination made by the Commissioner General of Inland Revenue on 22.05.2013. The Value Added Tax (VAT) appeal relates to 21 monthly taxable periods from April 2009 (09061) to December 2010 (10123) made under section 34 of the Value Added Tax Act, No. 14 of 2002.

Factual Background [2] The Appellant is a limited liability company incorporated in Sri Lanka and the Appellant is engaged in the provision of educational services. The Appellant entered into an agreement with the Board of Investment of Sri Lanka in terms of section 17 of the Board of Investment Law, No. 4 of 1978 (hereinafter referred to as the BOI Law) to conduct and operate a business and set up an Information Technology Training Institute for the offering of degrees, diplomas and certificates duly affiliated to Asia Pacific Institute of Information Technology (APIIT) of Malaysia, and Staffordshire University of the United Kingdom.

[3] The Appellant furnished returns under and in terms of the provisions of the Value Added Tax Act, No. 14 of 2002, as amended (hereinafter referred to as the VAT Act) for the taxable periods relevant to the assessments under appeal, and claimed an exemption from Value Added Tax (hereinafter referred to as the VAT) under section 8 of the VAT Act in respect of the educational services provided by the Appellant as an “Educational Establishment” within the meaning of section 83 of the VAT Act. By letter dated 15.11.2010, the assessor rejected the claim of the Appellant for the VAT exemption and assessments were made for the following reasons:

1. The Asia Pacific Institute of Information Technology Lanka (Pvt.) Ltd has not provided vocational Training or practical training in the areas of Information Technology, vocational training, management training, skills development or training for foreign employment, textile and clothing, nursing, food processing, agriculture, plantation or industrial;

2. According to the agreements and information were collected by the department, the Asia Pacific Institute of Information Technology Lanka (Pvt.) Ltd had conducted, without obtaining any prior approval from the Board of Investment, the following business activities and therefore, the APIIT has violated the terms and conditions of the Agreement and Supplementary Agreements which were entered into with the BOI:

(I) APIIT has entered into agreements with (a) Virtusa (Pvt.) Ltd;

(b) Celltel Lanka (Pvt.) Ltd;

(c) Mobitel Lanka (Pvt.) Ltd.

to lease part of the premises.

(II) APIIT has provided information technology consultancy services to Expo Lanka Freight in Dubai;

(III) APIIT has entered into an agreement with the Ministry of Education in Sri Lanka.

Appeal to the Commissioner-General of Inland Revenue [4] Being dissatisfied with the said assessments, the Appellant appealed against the assessments to the Commissioner-General of Inland Revenue (hereinafter referred to as the Respondent). The Respondent by its determination dated 22.05.2013