The Department of Revenue Investigation on Friday filed a case against Bottlers Nepal, the bottler of popular soft drink CocaCola in Nepal, former shareholders and immediate senior employees of the company at Patan High Court on the charge of evading taxes amounting to Rs3.71 billion.

According to the department, the company failed to pay applicable capital gain tax when its majority ownership was changed on October 24, 2014. The Dubai, UAE-based Coca Cola SABCO Asia Limited, which had majority stake in the Bottlers Nepal, had sold all its stake to the Ireland-based European Refreshment. The ownership transfer had taken place through ‘offshore Indirect transaction,’ according to the department.

In a statement, the department said the company failed to notify ownership transfer to relevant Nepali government agencies including the Large Taxpayers’ Office. The company failed to present income details of the fiscal year 2014-15 before and after the ownership transfer and failed to pay the taxes applicable due to ownership transfer, according to the department.

According to the department, it calculated the total amount of alleged tax evasion by incorporating the tax liability of applicable capital gain, fees and interest as per the Income Tax Act-2002. Coca Cola SABCO Asia Limited purchased each share of Bottlers Nepal for Rs536 and had sold the same at Rs3,883 per share, making a capital gain of Rs4.96 billion.

The tax investigation authority sought jail terms for nine former shareholders of Bottlers Nepal representing the CocaCola SABCO Asia Limited and eight immediate senior staffers of Bottlers Nepal. The department also seeks to recover Rs7.43 billion from the defendants.

The investigating agency claimed the jail terms as per section 23 (1D) of the Revenue Leakage Investigation and Control Act under which a jail term of three to five years is imposed on convicted individuals.

The department has sought jail terms for immediate senior staff of Bottlers Nepal as per the section 23 (3) of the Revenue Leakage Act under which they are subjected to half punishment of that slapped on the main accused as accomplices.

Shukla Wassan, Melvin Tan Chun Pin, Mohamed Amin Ghoneim, Gaurav Khosla, Sundeep Bajoria, Debabrata Mukherjee, Sumanta Datta, Jawahar Soali Kuppuswamy and Sanket Ray are former shareholders of the Bottlers Nepal and the main accused in the case.

Pradip Pandey, Puneet Chandrapal Varshney, Rajeev Tandon, Bharatbabu Dahal, Sumit Goyal, Ashok Kumar Mandal, Trilochan Upreti and Sanjeev Kumar Mishra have been named as accomplices in the case.

Taksar Magazine published detailed investigative reports on alleged tax evasion by the Bottlers Nepal in July last year and followed up the issue regularly. Its editor Gajendra Singh Budhathoki told the Post that it was a proud moment for him in his long economic journalism career because his reporting and continued follow-up helped the state take action in this ‘large tax evasion’ case.

“Mainstream media rarely followed up this issue, possibly because of commercial interests,” he said.

In February, 2019, the Supreme Court issued a verdict in favour of the government regarding Ncell’s similar tax evasion case.

Bottlers Nepal is the second multinational company manufacturing soft drinks to face a tax evasion case after Varun Beverage, the bottler of Pepsi. The department had filed a case at the Patan High Court against Varun Beverage in December 2019 on the charge of dodging tax by using fake VAT bills.