Sri Lanka’s State-Owned Bank of Ceylon is yet to terminate the Letters of credit (LCs) with respect to the importation of 399 vehicles.
On the 24th of May 2021, Sri Lanka’s Cabinet of Ministers decided to suspend the importation of even a limited number of vehicles in view of the dire economic situation in the country amidst the ravaging COVID-19 pandemic.
In April 2021, the Sri Lankan Cabinet of Ministers decided to import a certain number of vehicles in order to boost the efficiency of the government’s development drive.
The decision was made based on a cabinet memorandum produce by the Prime Minister and the memorandum clearly stated the 150 vehicles (50 Ambulances / 50 Water Bowser / 50 Double Cabs) must be imported to the country.
The cabinet memorandum also produced an alternative for MPs who have taken a hit from the government’s decision to suspend issuing duty-free permits to import vehicles.
Accordingly, as a solution to the issue, a decision was made to import 399 vehicles under Rs. 3.7 Billion leasing facility offered by the Bank of Ceylon.
The government’s decision to suspend the import 399 vehicles including 227 luxury vehicles with the approval of the cabinet of ministers has created unexpected critical problems for the leading local bank.
Although the decision to suspend vehicle imports was made on the 24th of May, the LCs were in fact opened by BOC on the 29th of April on behalf of the Government of Sri Lanka, and these LCs are yet to be terminated.
It is clearly stated here that the applicant in the letters of credit is Bank of Ceylon.
That is, this is a business transaction of the Bank of Ceylon.
The directive of the Central Bank of Sri Lanka to all licenses commercial banks and licenses specialized banks to the suspend facilitating the importation of motor vehicles under Letters of Credit is valid to this date and therefore, the Bank of Ceylon could in fact be fined under the provisions of the Imports and Exports (Control) Act No 1 of 1969 for violating this directive.
Most importantly, the Bank of Ceylon will also have to pay the duty for all 399 vehicles and the BOC is not a body free of paying duty to the state.
Therefore, if the Bank of Ceylon fails to pay the duty for these vehicles, it can be ruled as tax evasion.
(newsfirst.lk)