Social Activists Challenge Sri Lanka’s Liquor Giants in Supreme Court Over Rs.6,221 Million Tax Arrears

A group of seventeen social activists has taken legal action by filing a Fundamental Rights petition with the Supreme Court of Sri Lanka in a bid to address tax evasion. The petition demands immediate action from the authorities to recuperate overdue taxes from liquor manufacturers, which have reportedly ballooned to a staggering Rs.6,221 million as of June 15, 2023.

Led by activist Sanjaya Mahawaththa and represented by Attorney-at-Law Manjula Balasooriya, the petition names key figures and institutions, including the Commissioner General of the Excise Department, the State Minister of Finance, and the Auditor General. Additionally, several prominent liquor companies such as W. M. Mendis & Co. Limited, Wayamba Distilleries (Pvt) Ltd, and Globe Blenders and Bottlers Lanka (Pvt) Ltd, among others, are cited as respondents.

The legal action seeks not only the recovery of tax arrears but also aims to halt the renewal of manufacturing licenses for these companies until their tax liabilities are settled. This measure underscores the activists’ commitment to holding corporations accountable and ensuring fair tax collection.

This petition highlights a broader issue of tax evasion impacting the Sri Lankan economy, notably contributing to the country’s financial struggles. According to the petitioners, Sri Lanka’s failure to meet its tax revenue targets—falling short by 101 billion Rupees in 2022, with a significant portion from excise taxes—has been a critical factor in its economic challenges. They argue that the government’s inability to enforce tax collection effectively has hindered its financial recovery, even in the aftermath of the country’s bankruptcy.

Furthermore, the activists emphasize that these collection failures not only jeopardize the nation’s financial stability but also breach the terms agreed upon with the International Monetary Fund in 2022, aimed at bolstering Sri Lanka’s economic recovery.