Bank of Ceylon Vs. The Commissioner General of Inland Revenue – CA Tax No. 56/2023-2025

This case involves an appeal by the Bank of Ceylon against determinations by the Tax Appeals Commission (TAC) regarding Value Added Tax (VAT) on Financial Services for the taxable period of January 1, 2016, to December 31, 2016. The core legal issues revolved around two main areas: first, whether concessionary loans granted to employees should be valued at market rate or actual concessionary rate for VAT purposes, and if they constitute ’emoluments’ under Section 25C of the VAT Act; second, whether the gain from the sale of shares in Mireka Capital Land (Pvt) Limited by the bank is liable to VAT as a ‘financial service’ or ‘banking business’ transaction. The Court of Appeal consolidated four related appeals due to their shared substantial issues. The Court found that ’emoluments’ for VAT s