Three chambers legally challenge SVAT abolition

Free Trade Zone Manufacturers' Association, National Chamber of Commerce and Sri Lanka Chamber of Small and Medium Industries file writ application before Court of Appeal | Hold IRD move unlawful, unreasonable and violates Constitutional rights | Point to non-existing refund system, conditions of Risk- Based Refund Scheme not gazetted | Petitioners state represents entire export sector value chain, broader private sector community

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THREE private sector chambers filed a writ application before the Court of Appeal on Tuesday challenging the Inland Revenue Department's (IRD) decision to commence collecting Value Added Tax (VAT) from 1 October without first operationalising the legally mandated automated refund mechanism.

The chambers are the Free Trade Zone Manufacturers' Association (FTZMA), the National Chamber of Commerce of Sri Lanka (NCCSL) and the Sri Lanka Chamber of Small and Medium Industries (SLCSMI).

The Petitioners, representing exporters, deemed exporters, subcontractors to exporters, service providers in the export supply chain, SMEs, and the broader business community, state that collecting VAT from export-related businesses without a proper functioning refund system, and without publishing the conditions of the proposed Risk-Based Refund Scheme in the Gazette, is unlawful, unreasonable, and a violation of constitutional rights.

According to the Petitioners, the Government abolished the Simplified Value Added Tax (SVAT) scheme earlier this year, after it had been postponed by the previous administration at the request of the export community.