IN THE COURT OF APPEAL OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an appeal by way of Stated Case on a question of law for the opinion of the Court of Appeal under and in terms of Section 11A of the Tax Appeals Commission Act, No. 23 of 2011 (as amended).

Mclarens Lubricants (Pvt) Ltd, No.193, Dr. Danister De Silva Mawatha, Colombo 08.

APPELLANT CA No. CA/TAX/0026/2019 Tax Appeals Commission No. TAC/IT /013/2016 v.

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 : Neomal Gunawardena AAL., instructed by Nalin Samarakoon for the Appellant.

F. Jameel, SASG, P.C. with N.

Wigneshwara DSG & Dr. Charuka Ekanayake for the Respondent.

W RITTEN SUBMISSIONS : 27.01.2022 (by the Appellant)

23.02.2022 (by the Respondent)

ARGUED ON : 02.12.2021 DECIDED ON : 19.05.2022 M. Sampath K. B. Wijeratne J.

Introduction The Appellant, Lanka Marine Services (Pvt) Ltd, is a limited liability company incorporated in Sri Lanka, engaged in the business of importing, manufacturing, and distributing lubricants.

The Appellant submitted its return of income for the year of assessment 2010/2011 claiming a tax exemption under Section 42 of the Inland Revenue Act No. 10 of 2006, as amended by Inland Revenue (Amendment) Act No. 19 of 2009, (hereinafter referred to as the ‘IR Act’)¹ The Assessor, by letter dated 27^th November 2013 rejected the return on the ground that the Appellant’s sales made to marine companies cannot be identified as exports in terms of Section 42 of the Act. The Assessor was of the view the term export signifies ‘goods transferred from one country to another’. Accordingly, by the same letter, the Assessor communicated his reasons for not accepting the return, in terms of Section 163 (3) of the Inland Revenue Act, which also contained an estimated amount of assessable income and the tax payable for the year of assessment 2010/2011, [At p. 92 o the appeal brief.]

1 At p. 94 & 96 of the appeal brief, Paragraphs 24 to 27 of the Appellant’s written submissions dated 27th

January 2022.

Thereafter, the Notice of Assessment dated 29^th November 2013 was issued to the Appellant, [At p. 36 of the appeal brief.]

The company appealed to the Commissioner General of Inland Revenue (hereinafter referred to as ‘the CGIR’) against the said assessment, in terms of Section 165 of the Inland Revenue Act.

The CGIR heard the appeal and made his determination confirming the assessment and the reasons for the determination were communicated to the Appellant company by letter dated 15^th December 2015.

Being aggrieved by the said determination, the Appellant appealed to the Tax Appeals Commission (hereinafter referred to as ‘the TAC’) in terms of Section 7 of the Tax Appeals Commission Act No. 23 of 2011, as amended.

(hereinafter referred to as ‘the TAC Act’)

The TAC by determination dated 25^th June 2019 confirmed the determination of the Respondent, CGIR, and dismissed the appeal of the Appellant.

The Appellant then moved the TAC to state a case on the following questions of law for the opinion of this Court in accordance with Section 11 A of the TAC Act.

1. Whether the Assessment No. ITA 13291100321 VI which has purportedly been issued on 29^th November 2013 but only posted to the Appellant by the CGIR on the 11^th of December 2013 is time-barred in terms of Section 163 (5) (a) of the Inland Revenue Act, No. 10 of

2006 (as amended)?

2. Whether the sale of lubricants to non- resident ships out of bonded warehouses by the Appellant can be considered as qualified exports within the meaning of Section 51 and/ or 42 of the Inland Revenue Act, No. 10 of 2006 (as amended)?

4 At p. 32 of the appeal brief.

Analysis

1. Whether the Assessment No. ITA 13291100321 VI which has purportedly been issued on 29^th November 2013 but only posted to the Appellant by the CGIR on the 11^th of December 2013 is time-barred in terms of Section 163