Sojitz Kelanitissa (Private) Limited vs. Commissioner General of Inland Revenue – CA WRIT/19/2013-2023

Brief
In the case between Sojitz Kelanitissa (Private) Limited and the Commissioner General of Inland Revenue and others, the court addressed the issue of whether insurance indemnity payments and interest on delayed payments received by an independent power producer are subject to Value Added Tax (VAT) or qualify as zero-rated or exempt supplies under the VAT Act. It was held that both the insurance indemnity and interest on late payments were taxable for VAT purposes, and that the assessments were not time-barred due to willful nondisclosure by the petitioner. The principle was reaffirmed that a taxpayer’s failure to disclose material income in VAT returns, when willful, allows for assessment beyond the standard time bar. This decision relied on statutory interpretation of the VAT Act and