SUDATH DE SILVA

Vs.

DEPUTY COMMISSIONER OF PROVINCIAL REVENUE, SOUTHERN PROVINCE

COURT OF APPEAL
GOONERATNE, J.
SAMAYAWARDHENA,J.
CA/PHC/153/2011
SP/HCCA/MA/WRIT/3/2010
MC/MATARA/26330
JUNE 28, 2019

Provincial Council's power to levy Turnover Tax on sale of National Lotteries-Item 36.1 and 36.2 of the Provincial Council List-Items falling under the Reserved List-Fiscal Charter of the Southern Provincial Council, section 3(1)-Scope of Provincial Statues-Ultra vires decisions-Delay as a ground for dismissal

The appellant invoked the writ jurisdiction of the Provincial High Court of Matara seeking to quash by a writ of certiorari the Certificate of Tax in Default issued by the Commissioner of Provincial Revenue of the Southern Province to recover Turnover Tax allegedly defaulted on by the appellant for the period stated therein on the sale of lotteries of the National Lotteries Board, on the ground that the Southern Provincial Council did not have authority to levy Turnover Tax on the sale of lotteries of the National Lotteries Board. The High Court dismissed the application in limine on the ground of delay. The petitioner appealed to the Court of Appeal.

Held:

1. Delay shall not result in automatic dismissal of cases where no time limit to institute an action has been prescribed. In any event, if a party seeking to quash an administrative or judicial decision does so on the basis that the tribunal acted without jurisdiction, and the court is satisfied that the complaint is well-founded, the court shall not dismiss the application on delay.

2. In terms of item 36.2 of the Provincial Council List of the Ninth Schedule to the Constitution, Provincial Councils cannot levy taxes

on national lotteries and lotteries organised by the Government of Sri Lanka.

3. Items (f), (I) and (n) under Finance in the Reserved List of the Constitution are: lotteries organised by the Government of Sri Lanka or a Provincial Council; taxes on income, capital and wealth of individuals, companies and corporations; Turnover Taxes and stamp duties. Except to the extent specified in the Provincial Council List, these are subjects that come under the central government. Provincial Councils have no power to make statutes on them.

4. The argument of the Commissioner of Provincial Revenue that the Turnover Tax on the income of selling national lotteries was imposed in terms of section 3 of the Fiscal Charter of the Southern Provincial Council, which allows the Provincial Council to levy Turnover Tax on the income of selling any commodity, which includes a national lottery, cannot be accepted, as the Provincial Statutes are subject to the limitations contained in the Constitution.

5. A Provincial Council can make statutes with respect to any matter set out in the Provincial Council List, and it has no power to make statutes on any matter set out in the Reserved List, and if it does the latter, it can be challenged as being ultra vires.

6. The Commissioner of Provincial Revenue has acted ultra vires by issuing the Certificate of Tax in Default to recover Turnover Tax on the income of selling National Lotteries, which the appellant did as an Agent of the National Lotteries Board.

Cases referred to:

1. Rajakaruna v. R.J. De Mel, Minister of Finance [1985] 1 Sri LR 391
2. Biso Menika v. Cyril De Alwis [1982] 1 Sri LR 368

APPEAL from the Judgment of the High Court of Matara.

Rohan Sahabandu, P.C., for the Appellant.

Thilanka Peiris, S.S.C., for the Respondent.

cur. adv. vult.

July 25, 2019

SAMAYAWARDHENA, J.

The Commissioner of Provincial Revenue of the Southern Province (respondent) filed the Certificate of Tax in Default marked X1 in the Magistrate's Court of Matara to recover Turnover Tax allegedly defaulted by the appellant for the period stated therein on the sale of lotteries of the National Lotteries Board. The learned Magistrate by order dated 26.11.2007 ordered it to be recovered as a f