The former for not collecting tax on time and the latter for tax evasion
The Supreme Court has ordered the Regional Revenue and Customs office in Phuentsholing (RRCO) and a beer agnecy owner Tenzin Chophel to pay Nu 1.92 million each in relation to a tax evasion case in Phuentsholing.
Upholding the verdict of Phuentsholing drungkhag court, both the beer agency and the RRCO were found equally liable and ordered to share the amount.
The beer agency belonging to an individual Tenzin Chophel and operated by a non-Bhutanese manager had not paid taxes between 2007 and 2008. The RRCO issued numerous notifications to the agency, following which the agency had paid a few installments.
The RRCO and the manager of the beer agency, Akhilesh Kumar Singh, who mortgaged his property in Jaigaon, India on April 1, 2008 signed an agreement to pay the taxes and penalties. The licensee also entered the agreement as a witness. However, the manager went missing.
The Office of the Attorney General (OAG) charged the licensee of the beer agency Tenzin Chophel for tax evasion. The tax and penalties accumulated until October 13, 2014 was Nu 3.83 million.
The OAG appealed the Phuentsholing drungkhag court’s decision and argued that Tenzin Chophel should restitute the amount to the state.
Chukha dzongkhag court found the licensee guilty of tax evasion as he owned the business, and ordered that he pay all dues within three months of its decision. The High Court upheld the Chukha court’s decision.
The Supreme Court stated that although Tenzin Chophel knew that the manager had not paid the taxes, he failed to exercise his responsibility as the licensee.
Tenzin Chophel appealed that Akhilesh Kumar Singh should also be asked to pay half the taxes and penalties that are due to the state. However, the court said that it couldn’t accept this appeal as it was his complacency.
The RRCO and Tenzin Chophel were found equally guilty according to Part I chapter two and Part III section 27.2 of the Sales Tax, Customs And Excise Act 2000, the Supreme Court verdict stated.
RRCO Phuentsholing did not collect the sales tax on time and according to the Supreme Court the agreement was illegal. “The agreement created the opportunity for the non-Bhutanese to abscond,” the verdict stated.