A constitutional challenge before the Supreme Court has cast a sharp spotlight on Clause 31 of the proposed Inland Revenue (Amendment) Bill 2026, with critics warning that it could fundamentally alter the balance between administrative authority and judicial oversight in Sri Lanka’s tax system.
At the centre of the dispute is a provision empowering the Commissioner General of Inland Revenue to issue certificates confirming alleged tax defaults? These certificates, under the proposed amendment, would be treated as conclusive evidence in Magistrates’ Courts. The petitioner, chartered accountant Prasad Dasanayaka, argues that this effectively strips courts of their ability to scrutinise the validity or accuracy of such claims.
Legal experts suggest that the clause raises profound constitutional questions. By compelling Magistrates to accept administrative determinations without question, the provision appears to curtail the judiciary’s core function: independently evaluating evidence and adjudicating disputes. The petition contends that this transforms judges into passive enforcers rather than active arbiters, undermining the doctrine of separation of powers.
The constitutional concern hinges on whether such a framework amounts to an impermissible transfer of judicial power to an executive authority. Sri Lanka’s Constitution clearly vests judicial power in courts and institutions established by law, ensuring that disputes especially those involving financial liabilities are subject to impartial review. Critics argue that Clause 31 disrupts this structure by placing decisive authority in the hands of a tax administrator.
Beyond institutional concerns, the clause also raises practical implications for taxpayers. If courts are bound to accept tax default certificates as final, individuals and companies may be left without meaningful legal recourse. Even in cases of calculation errors, disputed assessments, or pending appeals, the inability to challenge these certificates could lead to unjust outcomes, including wrongful penalties or enforcement actions.
Supporters of the amendment may argue that such measures are necessary to streamline tax recovery and reduce litigation delays. Tax authorities often face prolonged legal battles that hinder revenue collection, and granting evidentiary weight to official certifications could expedite enforcement. However, critics counter that administrative efficiency cannot come at the cost of constitutional safeguards.
The broader issue, analysts note, is not merely about taxation but about preserving institutional integrity. If administrative bodies are allowed to issue binding determinations immune from judicial scrutiny, it could set a precedent extending beyond tax law into other areas of governance.
The Supreme Court’s determination on this matter will likely have far-reaching implications. A ruling against the clause could reaffirm the judiciary’s role as a check on executive power, while a decision upholding it may signal a shift toward stronger administrative authority in fiscal matters.
As the case unfolds, it is poised to test the resilience of constitutional principles in the face of evolving governance challenges, particularly in balancing efficiency with accountability