1. Background of the Case

This case concerns an application for a writ of Certiorari filed by the petitioners, W.M. Mendis & Co. Ltd and its director, Mr. Anthony Randev Dinendra John, challenging certain orders made by the Magistrate’s Court of Colombo related to unpaid taxes. The case was argued before the Court of Appeal of Sri Lanka, with hearings conducted on November 8, 2024, and a decision rendered on November 12, 2024.

2. Key Facts

• The Commissioner General of Inland Revenue (3rd Respondent) initiated proceedings in the Magistrate’s Court of Colombo under Section 43(1) of the Value Added Tax Act No. 14 of 2002 (VAT Act) to recover unpaid taxes from the 1st petitioner, W.M. Mendis & Co. Ltd.
• According to a certificate dated June 11, 2020, the company had defaulted on tax payments amounting to Rs. 3,555,488,597.
• The Magistrate’s Court issued an order on November 14, 2023, holding the company and its directors, including the 2nd petitioner, liable for the tax default. The directors were found jointly and severally liable for the unpaid amount, with a potential penalty of 6 months imprisonment if the taxes were not settled.
• The petitioners sought to challenge the Magistrate’s order by filing an application for a writ of Certiorari to quash the Magistrate’s refusal to grant bail to the 2nd petitioner and to suspend the proceedings against him.

3. Legal Issues Raised

The primary legal contention by the petitioners is centered around the right to appeal against the Magistrate’s orders under the VAT Act. The petitioners argue that:

1. The imprisonment order issued by the Magistrate was not based on a direct application under the Code of Criminal Procedure but rather on a tax certificate under the VAT Act.
2. The petitioners contend that, despite the absence of an explicit statutory right to appeal in the VAT Act, they should be entitled to seek a revision of the Magistrate’s decision.

4. Arguments by the Respondents

The Deputy Solicitor General (DSG), representing the 1st to 4th Respondents, raised several objections:

• Availability of Alternative Remedies: The DSG argued that the petitioners had other legal avenues, such as appealing to the High Court, which they had already attempted.
• Locus Standi: The DSG questioned whether the petitioners had the proper standing to file the current writ application.
• Suppression of Material Facts: It was alleged that the petitioners failed to disclose all relevant information to the Court, thus misleading it.

The DSG cited the case of Muthumadinage Ranjit Perera v. H.S. Fonseka to argue that the right to appeal is guaranteed under the International Covenant on Civil and Political Rights (ICCPR) but is subject to local laws.

5. Court’s Analysis and Ruling

The Court of Appeal examined whether the petitioners have a right to appeal against a conviction or sentence under the VAT Act, even if such a right is not explicitly provided by the statute. The Court relied on the precedent set in M. Kanishka Gunawardena v. H.K. Sumanasena, where the Supreme Court recognized an implied right of appeal under certain conditions.

Key Findings:

• The Court acknowledged that the VAT Act does not explicitly provide a right of appeal but left open the question of whether such a right could be inferred, especially where penal sanctions are imposed.
• The Court noted that the filing of a purported petition of appeal by the petitioners in the High Court did not automatically suspend the Magistrate’s proceedings. The petitioners had not effectively sought an interim stay from the High Court.
• The Court emphasized the principle that mere filing of an appeal does not stay execution unless explicitly provided for by law. This was supported by previous rulings such as Nandawathie v. Mahindasena.
• The Court refused to grant interim relief to the petitioners, including releasing the 2nd petitioner on bail or staying the proceedings of the Magistrate’s Court. However, it clarified that its refusal did not prevent the High Court from considering the petitions of appeal already filed.

6. Conclusion

The Court of Appeal concluded that the petitioners’ application lacked sufficient merit to grant interim relief. However, the final decision on whether the petitioners have a right of appeal against the VAT-related conviction will be evaluated at a later stage when the merits of the case are fully examined. The petitioners’ failure to act promptly in seeking relief from the High Court, coupled with the lack of express statutory provision for an automatic stay, led to the dismissal of their application for interim orders.

7. Recommendations for the Petitioners

• The petitioners should focus on substantiating their grounds for a right of appeal in the High Court, particularly under the provisions of the ICCPR Act.
• It would be prudent to explore all possible statutory remedies and seek interim relief in the High Court to avoid the risk of further proceedings in the Magistrate’s Court.
• Given the Court of Appeal’s observations, the petitioners should address the issue of suppression of facts and ensure full disclosure in future applications.

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