By: A Special Correspondent
September 29, Colombo (LNW): Serious allegations have surfaced involving the importation of BYD electric vehicles into Sri Lanka, with claims that vehicle engine capacities were deliberately understated to avoid paying the full tax. The case remains ongoing in court.
The local importer of the vehicles in question is John Keells CG Auto (Pvt) Ltd, a joint venture between Sri Lanka’s conglomerate John Keells and Nepalese automotive firm CG Motors. CG Motors is a subsidiary of the Chaudhary Group, owned by Binod Chaudhary, Nepal’s wealthiest individual and its only dollar billionaire.
Dodging Duties by Adding a Seat?
CG Motors has also been embroiled in tax evasion controversies in Nepal. In a striking example reported by Nepalese media, the company allegedly manipulated vehicle classifications to drastically reduce import duties.
Under Nepalese law:
* A 14-seater microbus is taxed at 10 per cent.
* A 15-seater or larger minibus pays just 1 per cent duty.
On September 15, 2023, CG Motors imported 30 King Long XMQ 6520 (14-seater) microbuses from Xiamen King Long United Automotive Industry Co. Ltd., China, and paid the standard 10 per cent duty under HS Code 8702.40.30.
However, on April 04 2024, they imported 50 more microbuses of the same model, this time adding an extra seat and classifying them under HS Code 8702.40.20 as 15-seaters, thus paying only 1 per cent duty.
According to Nepal’s Motor Vehicles and Transport Management Act (1993), a minibus must meet specific technical criteria—seat dimensions, vehicle weight, and interior height, among others. The King Long XMQ 6520 reportedly does not satisfy these requirements, even with an extra (often folding) seat.
Investigations have uncovered that CG Motors may have committed tax fraud totalling over NPR 1.45 million, including customs duties, excise taxes, VAT, and road maintenance fees.
This is not the first such case involving CG Motors. The company had previously faced legal action over underreported specifications on KYC electric vans and was found guilty by Nepali courts, being ordered to repay the defrauded taxes.
From Kathmandu to Colombo: Is John Keells Involved?
The controversy has now reached Sri Lanka.
John Keells CG Auto (Pvt) Ltd and its Nepalese partner CG Motors are accused of understating the motor capacity of imported BYD electric vehicles—from 150 kW to 100 kW—thereby avoiding higher import duties. While Sri Lanka Customs initially accepted the declared 100 kW figure, the importer argued that the reduction was legitimate, citing firmware modifications by the manufacturer.
Sri Lanka Customs responded by appointing a technical expert committee to verify the true motor output. The committee’s report is still pending submission to court. In the meantime, the court allowed the release of around 1,500 BYD vehicles, secured against bank guarantees worth LKR 4.5 billion.
The tax differential between a 100 kW and 150 kW vehicle is approximately LKR 3 million. If even 1,000 vehicles were misclassified, this could mean a loss of LKR 3 billion to the state. Reports suggest that over 2,500 BYD ATTO 3 models alone have already been imported and sold in Sri Lanka, implying potential tax losses exceeding LKR 7.5 billion for that model alone.
Sources further indicate that other BYD models may also have been misdeclared in a similar manner, which could increase the scale of the tax fraud significantly.
Collusion or Deception?
What remains unclear is whether John Keells was deceived by CG Motors, or if the two entities knowingly collaborated to exploit legal loopholes and deprive the Sri Lankan state of billions in tax revenue.
Given CG Motors’ history of tax evasion in Nepal, it raises concerns that such schemes may now be expanding regionally—potentially turning Sri Lanka into a new hub for these practices.
If the allegations are true, this would not just be a matter of business ethics, but a major national issue. The loss of billions in tax revenue is especially troubling in a country grappling with poverty and economic recovery. The question now is whether powerful billionaires—both local and foreign—are being allowed to skirt the tax net, creating unfair monopolies at the public’s expense.
The unfolding investigation into John Keells CG Auto and CG Motors reveals what could be a multi-billion-rupee tax evasion scandal involving misclassified electric vehicle imports. While the courts are yet to deliver a final verdict, the stakes are high—not just in terms of financial loss, but also in terms of public trust, corporate accountability, and the integrity of regional trade practices.
Sri Lanka must now decide: Will it allow billionaires to bypass its tax system—or ensure justice is served, no matter how powerful the players involved?
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