The Pelwatte Sugar Company is carrying
contingent liabilities of Rs. 353 million in its books up to
June 18, 2003 for non payment of taxes including the National
Security Levy on the sale of sugar and molasses for which no
provision had been made in the financial statements.
The company has not paid VAT under the VAT Act
No. 14 of 2002 with the net liabilities after claiming input tax
amounting to approximately Rs. 136.9 million, financial
statements in the annual report reveals.
Pelwatte reported it has filed its VAT return on
the basis that the value of supply of sugar and molasses were
exempt under provisions of the VAT Act. But the revenue
authorities have taken the position that such exemption only
applies to unprocessed agricultural products land sugar and
molasses do not qualify as unprocessed.
The Inland Revenue Department by an assessment
note last July had included a Rs. 24.3 million penalty in
addition to the tax in default.
The financial statements also indicate other tax
dues for which assessments of Rs. 125.9 million including a Rs.
44.5 million penalty has been received for non payment. The
company says that assessments could be raised for previous and
future periods with penalty regarding such taxes.
