Rule of law in taxation: Rights before revenue – Part 2

PART 1 of this article (https://www.ft.lk/columns/Rule-of-law-in-taxation-Rights-before-revenue-Part-1/4-779983) emphasised the fundamental principle that taxpayers’ rights take precedence over the taxing right of the State, particularly when those rights are violated by tax authorities.

- By N.M.M. Mifly

In such instances, tax officals are not only legally bound but also morally obligated to respect and uphold taxpayers’ rights above their administrative duty of tax collection.

The earlier part also underscored another important taxpayers right of citing the legal basis and specific statutory provisions under which a taxis imposed. Failure by a tax official to disclose this essential information constitutes a serious procedural flaw, rendering the assessment invalid. This position has been repeatedly affirmed by superior court decisions and now stands as settled legal precedent.

Scope extends beyond the IRD to all revenue-earning agencies

Please be reminded that the term“tax’, “taxpayer’, “tax officials” and other related expressions used in this article are not limited to those administered solely by the Inland Revenue Department. As mentioned in Part 1, Since IRD-collected taxes cover a wide portion of the population and account for the largest share of government revenue, both taxpayers and tax officials of the IRD have been taken as the primary focus for illustration. | respectfully request readers to interpret the term “tax” and’taxation” in this artide in a broader sense, encompassing all three departments—Inland Revenue, Customs, and Excise —depending on the context”

Right to know the reason for the official assessment

This Part2 highlights another vital taxpayer right—the right to know the reasons for offical actions Thisright serves as a powerful safeguard against the misuse of discretionary powers by both errant public officials and members ofthe publi.

Understanding the significance ofthis right requires awareness of the broader context: the nature and types of tax assessments, the legal authority granted to tax officials to audit self-assessed returns and impose additional taxes, its limitations, etc.

Types of tax assessments