OAG appeals tax evasion case ruling

The Office of the Attorney General (OAG) filed an appeal at the High Court yesterday against the Phuentsholing Court’s ruling in favour of defendant Jatan Prasad, proprietor of Jatan Prasad Lalchand Prasad departmental store.

Phuentsholing drungkhag court on July 20 ruled that Jatan Prasad has to pay Nu 14.487M against the evaded tax worth Nu 184M in four years from 2011 to 2014.

In their appeal, the prosecution stated that although, the OAG respects the decision of the drungkhag court, it felt that the court erred in considering the deduction of purchases (direct costs) associated in the evaded income of the defendant.

“The prosecution is of the strong view that such consideration, after establishing the tax evasion, is expressly barred by the Income Tax Act, 2001,” the OAG attorney stated in the appeal.

The defendant, while filing his annual tax returns for 2011-2014 at the Phuentsholing Regional Revenue and Customs office, intentionally furnished inaccurate income by over-stating the purchases and under-reporting the sales. Accordingly, the prosecution for tax evasion was initiated before the Phuentshoing drungkhag court against the defendant and hearings were presided over by the Chukha dzongkhag court drangpon, Gembo Dorji.

The prosecution appealed that the subordinate court held Anti-Corruption Act 2011 (ACA) as the Specific Act and other relevant Acts as the General Act and ordered the defendant to pay a fine, twice the evaded tax amount under ACA.

The prosecution is also of the view that the particular section under ACA, which defines the tax offence, is inexplicit whereas provision under Penal Code of Bhutan is explicit to convict the defendants committing tax evasion. “We felt that there is a need to determine under which Act such defendants should be convicted. Further, we also have other issues that need to be resolved by the appellate Court,” the OAG stated in its appeal.

“As the outcome of the Subordinate Court’s decision is due to misinterpretation of the relevant Acts, we felt that if we do not appeal on the question of law against a judgment of the subordinate court, Bhutan will never have a true tax payer as this tax evasion case will set a bad precedent encouraging business operators to breed similar criminal offences. And also it will bring serious inconvenience to the tax collecting agencies,” the letter stated.

The prosecution also charged Jatan Prasad’s accomplice, Raj Chowdary, for aiding and abetting in tax evasion through tampering of documents and invoices. However, Kuensel learnt that the lower court had overlooked this and not mentioned in the court ruling.

In addition to the tax evasion of Nu 14.487M, the lower court also asked Jatan Prasad to pay Nu 7.87M in lieu of imprisonment.

Jatan Prasad was released on bail amount of Nu 80M by OAG on September 16, 2015 after the ACC detained him for three months and denied his bail since no one was willing to come forward as his guarantor and pay Nu 184M.

Rinzin Wangchuk

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