Eight government employees face court cases for abetting traders to evade revenue last fiscalOfficials said this is the first time government staff are facing such action although they were liable to minor actions in the past.
The Department of Revenue Investigation has filed a case against eight government employees for abetting traders to evade revenue in the fiscal year 2018-19.
On February 23, last year, the government had brought this department under the Prime Minister's Office, along with the National Investigation Department and the Department of Money Laundering Investigation by amending the Nepal Government Business Rules.
Although many criticised the government’s move as Prime Minister KP Sharma Oli’s effort to centralise power, it helped reduce the influence of revenue staff at the department, which created a conflict of interests in many cases. Earlier, the department was under the Finance Ministry and its organisation was heavily dominated by the revenue staff.
The office dominated by the revenue staff often faced accusations from the traders that it took action against the traders engaged in revenue dodging but spared the government employees helping to dodge the revenue from any action. The traders can evade tax in collusion with government staff employed at the Customs Office and Tax Offices.
“Conflict of interest of the revenue staff is one of the reasons why the department should have been brought under the Prime Minister’s Office,” said Dirgha Raj Mainali, director general of the department. “Now, both traders and government staff involved in revenue dodging face equivalent actions.”
After bringing the office under the Prime Minister’s Office, the department has made an effort to reduce the influence of revenue staff at the department. “Revenue staff at our office now account for 50 percent from around 95 percent a year ago,” said Dhruba Ghimire, deputy director general of the department. He, however, said that the department would continue to retain revenue staff as they are the people having knowledge on revenue and tax issues.
On August 17 last year, the department had filed a case against six government staff including chief customs officer at Nepalgunj customs—Janardan Acharya on charge of helping a group of traders led by Binod Gupta to dodge revenue.
The department had filed cases at the Kathmandu District Court against 20 people including Gupta, an Indian trader and proprietor of Himalayan Cargo, and his wife Madhu Kumari Gupta, along with six customs officials in charge of evading tax amounting to Rs 540 million over the past one decade.
In this case, the Nepal customs staff faced the charge of allowing Gupta to import milk powder without producing customs clearance documents at the customs office, due to collusion between the two sides.
Just before the milk powder was imported, CCTVs at the customs office were not working, which the department blames on the collusion between the government staff and traders.
Gupta, his family members and relatives were involved in forming different companies and doing transactions through fake VAT bills to avoid paying taxes in Nepal, according to Mainali.
On December 10 last year, the department filed another revenue evasion case against two government staff Rasuwa Customs Office—customs officer Pabitra Kumar Khadka and customs examiner Diraj Kumar thapa—along with traders involved in revenue evasion.
The department has charged them with causing losses for the government in collusion with traders during the clearance of cargo which had different goods and different countries of origin than what was mentioned in the customs clearance documents.
The department has sought Rs150 million from each of them, double the evaded amount, in addition to the confiscation of the amount and jail term of three years. The Commission for Investigation of Abuse of Authority has also filed case against the duo in February.
According to present and past officials of the department, government employees in the past had faced minor action such as issuance of warning letters. “The government's staff have also faced action like with warning letter. But I am not sure whether any case was filed against them,” said Shanta Bahadur Shrestha, former government secretary, who worked as the director general of the department from March 2011 to April 2012.
“I had taken a few police personnel including an Armed Police Force DSP in custody for helping traders to dodge revenue,” said Shrestha. “But, I am not sure what happened to them as I was transferred from the department when they were still in custody.”
Shrestha also admitted that movement of revenue staff between the department and other revenue related offices had created a conflict of interest. “Even during my tenure as director general, a proposal to bring this organisation under the Prime Minister’s Office was prepared,” he said. Before the department came under the PM’s Office, it had rarely filed revenue evasion cases at the court. It is because the department was bestowed the authority of determining and recovering taxes as per the Value Added Tax Act, the Income Tax Act and the Excise Duty Act.
But, since coming under the Prime Minister’s Office, the department has given up exercising authority as per these tax laws. Instead, it started an investigation and filed a case at the court as per the Revenue Leakage (Investigation and Control) Act and the government staff have also been its target.
According to department, it filed a total of 97 cases related to revenue evasion against 295 people for dodging revenue worth Rs8.88 billion last fiscal year. Likewise, it also filed other 91 cases against 183 people for foreign exchange misappropriation of Rs4.61 billion in the last fiscal.