Full bench hearing Ncell tax case

A full bench of the Supreme Court (SC) on Tuesday has started hearing on case about capital gain tax to be recovered from telecom service provider Ncell.
The full bench including Justices Tej Bahadur KC, Purushottam Bhandari, Dambar Bahadur Shahi, Sushma Lata Mathema and Manoj Kumar Sharma has started hearing in the case.
A joint bench of Justices Sapana Pradhan Malla and Prakash Kumar Dhungana on May 7 had ordered the Large Taxpayers Office to not immediately recover the capital gain tax from Ncell and called for convening of a full bench to decide on the petition.
A single bench of Justice Bam Kumar Shrestha hearing the petition on April 25 had issued a show cause notice in the name of the office to explain the reason for determining the tax amount and stopped immediate recovery of tax.
Ncell had filed the petition against the tax determination a day before meeting the seven-day deadline issued by the Large Taxpayers Office to pay the capital gain tax.
The Taxpayers Office on April 16 had determined that Ncell should pay Rs 39.06 billion more in capital gain tax. It had sent a notice to Ncell to pay the tax within seven days. Ncell, that has already deposited Rs 23.57 billion in two installments, has claimed that it should pay only Rs 14.365 billion more.
It had pointed that the SC has just ordered to recover capital gain tax, and not interest and late fine. It added that it should pay 25 percent of the capital gain of Rs 143.65 billion during the sale which comes out at Rs 35.91 billion. It has contended that it, therefore, should pay only Rs 14.365 billion more as it has already deposited Rs 23.57 billion.
Swedish-Finnish company TeliaSonera has not paid capital gain tax for sale of its 80% stake in Ncell to Malaysian company Axiata in April 2015. The Large Taxpayers Office earlier had determined that TeliaSonera had made capital gain of Rs 143.65 billion during the sale.
The extended full bench of Supreme Court (SC) headed by Cholendra Shumsher Rana on February 6 had ordered that the capital gain tax be recovered from Ncell and Axiata.
The Large Taxpayers Office issuing a notice on Tuesday had determined that Ncell must pay Rs 62.63 billion in capital gain tax including interest until now. It had told Ncell to pay the remaining Rs 39.06 billion within seven days.
The full bench including Justices Meera Khadka, Bishwambhar Shrestha, Ananda Mohan Bhattarai and Tanka Moktan hearing a petition filed by Dwarika Nath Dhungel demanding the capital gain tax be recovered from Ncell on February 6 had issued a mandamus ruling that Ncell and Axiata should pay the tax.
The mandamus reasoned that Ncell has to pay capital gain tax to the Nepal government despite TeliaSonera selling the shares to Axiata as its business is based in Nepal.
The full judgement of the mandamus published on April 9 had ordered the government to recover the tax from the telecommunication company and its majority shareholder Axiata within three months.
Malaysian company Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from the Swedish-Finnish company TeliaSonera in April 2016. Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis, a tax haven.
Though capital gains tax needs to be paid by the company that gains from the deal, TeliaSonera has already exited Nepal.
Ncell has already deposited Rs 23.57 billion in two installments as tax applicable on the profit generated through sale of the telecom company. It had first paid Rs 9.97 billion in May, 2016 in tax return based on its own calculations. It had then paid Rs 13.60 billion on June 4, 2017 bowing to intense pressure and criticisms from a cross section of the society.



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