The Bhutanese Leading the way.
ACC files appeal to the Supreme Court and says letters, calls and texts from ACC Chairperson and Commissioner to AG on case went unanswered
ACC in a press conference points out that defense law firm of JPLP was formerly owned by AG
AG fires back saying non-appeal done based on RoP of OAG, says OAG will file counter appeal and dismisses ‘cheap assumptions’ of ACC
In what is another major showdown between the Anti Corruption Commission (ACC) and the Office of Attorney General (OAG), the ACC, held its first ever case related press conference on the Jatan Prasad Lal Prasad (JPLP) tax evasion case.
The ACC said that despite the Commission sending two earlier reminders in writing to the OAG to file an appeal to the Supreme Court the OAG did not do so.
ACC said that in fact the despite the two internal committees of OAG which are the sub-screening corpus and general corpus recommending to appeal the case the Attorney General refused to appeal.
In a dramatic moment an ACC Commissioner said that on the final day of the appeal on 29th August an ACC Commissioner and the ACC Chairperson herself both tried to repeatedly call the AG on his mobile and even messaged him to find out about the appeal but there was no response.
ACC said that it learnt about the AG’s decision to not appeal only at the last moment after which the ACC had to rush to the Supreme Court and file its own appeal in the last hour.
An ACC Commissioner in the press conference said that it is a matter of fact that the legal company of the defendant JPLP is Bhutan Law Service which was formerly owned by the AG.
Outside the press conference ACC officials said that they are concerned with how this JPLP case has been handled right from the beginning.
They said this started in 2015 September with the Attorney General personally going to Phuentsholing himself and reducing the bail amount of Jatan Lal Prasad from Nu 184 mn to Nu 80 mn without consulting the ACC.
ACC officials said that at the time Jatan’s lawyer should have moved the court to attempt to reduce the bail amount instead of the AG doing it.
They said that with the latest development, ACC is concerned that this case has not been handled by the OAG as per the due process and that the way this case has been handled raises certain questions now.
An ACC official said, “Given that the defense lawyer’s firm for Jatan is the former law firm of the AG, one would have hoped that the OAG would have taken full precautions to avoid any unnecessary controversies in this particular case.”
The official said that the AG should have abstained from taking any direct decisions on this case.
In the press meet the ACC in response to a question highlighted how even in the Gyelpozhing case the OAG at the time had declined to prosecute the case and the ACC had to step in.
It said that the Trongsa case is another example where the current ACC had to prosecute the case on its own after OAG’s refusal and it even cited its recent difference of view with the OAG who said the former RICBL CEO cannot be charged for embezzlement while the ACC had given evidences to show he can in fact be charged.
This latest development will only widen the growing trust gap between the ACC and the OAG.
The JPLP wholesale cum retail business in Phuentsholing was investigated in 2015 by the ACC for tax evasion. The defendant Mr. Jatan Prasad Lal Chand Prasad and his staff Mr. Rajesh Choudhary were charged for tax evasion in Phuentsholing Dungkhag Court with restitution of Nu. 126.897 million in back taxes and penalties.
The trial court ruled that the defendant should be given the deduction of direct cost and accordingly ordered the total restitution of only Nu. 14.487 million and additional Nu 7.875 million as fines.
The Office of the Attorney General (OAG) appealed to the High Court. The High Court Bench III ruled in favour of the OAG and sentenced the defended to 5 years’ non-compoundable imprisonment term in addition to restitution of Nu. 126.897 million.
The defendant moved the appeal to Larger Bench who, by and large, upheld the judgment of Phuentsholing Dungkhag Court.
After the judgment rendered by the Larger Bench, the ACC said it reviewed it and formally suggested the OAG writing two times to appeal but the Attorney General did not respond.
Showing a complete breakdown in trust an ACC official also brought up the fact that in the Buddha Dordenma case of Nu 340.399 mn worth of funds not being accounted for investigated by the ACC the defense law firm is Bhutan Law Service for the defendants Anim Damcho and Lam Tshering Wangdi.
The ACC recently forwarded the case to the OAG for prosecution with an ACC official publicly saying that given the past trend they also expect a ‘controversy’ in this case too.
ACC’s grounds of appeal
The ACC said it had wanted to appeal the JPLP case based on three main grounds.
The first ground according to ACC is that under section 35.1 and 35.2 of the Income Tax Act a person found guilty of tax evasion should pay a penalty on the total income with no deduction for any expenses which ACC says is a total restitution and fines of Nu 126.897 mn in this case.
This is because those guilty of tax evasion cannot claim deduction of expenses from the total revenue.
The ACC said that the larger bench allowed the deduction of direct cost from the restitution and fines part thinking it is not part of expenses.
However, ACC said that direct costs and expenses means the same thing and are used interchangeably and they pointed to the Business Income Tax form in the Income Tax Rules 2001 where direct expenses includes direct purchase and all other expenses under one head.
The ACC also highlighted that in all past tax evasion cases the the term expense also includes direct cost.
The ACC said that the second ground is that the Supreme Court in a similar OAG vs Yeshi Choden Scrap Dealer case had also not allowed the deduction of any direct costs and made her restitute the entire revenue amount along with fines and with no deductions allowed.
ACC said the ruling of the larger bench of the High Court is not in accordance with accounting principles and the precedent set by the Supreme Court.
The third ground for the ACC is that if this case is not appealed it will become a ‘case law’ or precedent for future tax evaders to get away very lightly and so tax evasion would be go up significantly as there would be no strong legal consequences.
The Attorney General responds
The Attorney General Shera Lhendup responded to all the issues raised by the ACC in a telephonic interview with the paper.
He said that the two committees do not come up with any decision but they come up with a recommendation to the AG and then seek his final decision.
The AG said that firstly the understanding and decisions of the corpuses are not unanimous and so while they may recommend an appeal the final call is left to the AG.
The AG said that the decision to not file an appeal to the Supreme Court is based on the Rules of Procedure (RoP) of the OAG which says that if two courts give the same or similar judgment then the OAG may not file an appeal and it is up to the OAG.
The AG said that the trial court had given one verdict and though the high court’s third bench gave a different verdict the larger bench of the high court upheld the verdict of the trial court.
He said that can be interpreted as two courts giving a similar judgment and besides that case has been going on for four years.
He said the judgment of the larger bench was also reasonable from the fairness point of view.
On ACC’s pointing out that he formerly owned Bhutan Law Services, the AG said that he had given up its ownership and handed it to the two lawyers there and severed all links with the law firm and had no dealings with it and so it is unethical on the part of ACC to now bring it up.
On the issue of the negotiation of the bail amount the AG said that the OAG had negotiated the bail amount at Nu 80 mn which is the highest in Bhutanese history as normally bail amounts in other cases do not exceed four to five lakhs.
He said it was then the decision of the court to agree to the bail at that amount and accordingly release Jatan for that amount.
The AG said that Jatan is as good as a Bhutanese as he has a lot of lands and assets in India and if he had fled then all of it could have been seized.
The AG challenged ACC’s legality of appeal saying that ACC is not party to the case and only a party to the case can appeal.
He said there is separation of powers and functions in terms of investigation and prosecution between ACC and OAG for a fair criminal justice system and so if they interfere too much then it would not be appreciated under rule of law.
He said that ACC cannot appeal both under the Constitution and the also under the Civil and Criminal Procedure Code and so the Supreme Court should not accept an appeal and instead the Supreme Court should issue a show cause notice to the ACC on why it should accept the case and the OAG’s side should also be heard.
The AG said that in the coming week before Friday the OAG would submit its own submission to the Supreme Court on why the ACC cannot appeal. He said the Supreme Court should uphold the Constitution.
The AG said that in the Lhakhang Karpo case the ACC had hidden information about a decision by a second committee which only came up towards the end of the trial in the district court and based on this the OAG had to drop certain charges against the former foreign minister.
He said ACC tried to appeal in the high court to reinstate those charges but the the High Court ruled against the ACC saying it has no locus standi.
On the issue of Bhutan Law Service, he said, “They are being too presumptuous about everything and ACC’s attitude is that ‘Rome must Die’ or that the outcome must be what we investigated.”
He said that under the law operates based on the CCPC and decisions are made by an independent court whether there are vested interests or not and there is an appellate court above.
He said ACC is coming up with ‘cheap assumption and presumptions’ and if this is the approach then everybody in Bhutan would be in some conflict or the other.
The AG said that the lawyers Younten Dorji and Kuenzang Wangchuk who now own Bhutan Law Services share no interests with him.
“These are ACC’s own ghosts with no genuineness,” said the AG.
He said if such historical links of ownership are being brought up then such presumptions would follow people to their death.
He said that if ACC has any proof then an independent prosecutor can be put in place.
He said the AG is fully conscientious in dealing with any of the cases ACC should present factual evidence instead of presumption taking over the facts.
The AG said that in the Trongsa case the ACC accused the OAG for manipulation of facts but their case in court did not show this and instead ACC’s did a re-investigation and increased the number of defendants from six to 10.
He said that Trongsa court should never have accepted the ACC case.
In the RICBL case the AG said that ACC came with eight new statements and new evidences.
On the grounds of appeal being the precedent of Yeshey Choden’s case the AG said that Yeshey was a scrap dealer who did not have accounts and receipts but in the case of JPLP it was an established business with accounts and receipts and so the two cannot be compared.
The AG said that the larger bench of the high court had laid out the principle in a fair and just manner that only taxable income can be restituted and fined instead of the approach of killing the entire Goose itself. The AG said that one of the three judges on the case had in fact helped draft the Income Tax Act itself.
Proceedings in the Supreme Court
Sources in the Supreme Court said that the Supreme Court had accepted ACC’s appeal which came in the last minute upon the non-appeal by the OAG.
The Supreme Court for now has allowed the ACC to appeal based on its own earlier precedent in the Gyelpozhing case where the ACC was allowed to prosecute the case.
However, this does not mean that the Supreme Court has accepted the right of ACC to prosecute the case but what it means is that the ACC will get a hearing and the defense lawyer will also get a hearing in the elephant bench.
The elephant bench will then bring the matter to the bi-weekly conference or meeting of the Supreme Court judges and then the majority of the judges will take a decision to allow the ACC to prosecute the case further or not.
If the judges give consent, then the full bench of the Supreme Court will hear the case and if not then all of them will sign on the order not accepting the case.
According to a source, the OAG’s submissions may not be accepted as it has not appealed the case.
