Adv. Srijana Adhikari et al. v. Ministry of Finance et al. (Writ No.: 076-WO-0966)

Background of the Case

During the outbreak of the COVID-19 pandemic, Nepal went into lockdown starting from 2076/12/11 B.S. (March 2020). On 2077/2/20 (June 2, 2020), the Government of Nepal, through the Inland Revenue Department (IRD), issued a notice requiring taxpayers to file tax returns and make payments by 2077 Jestha 25 (June 7, 2020).

The petitioners, including Adv. Srijana Adhikari and Chartered Accountant Shailendra Uprety filed a writ petition before the Supreme Court of Nepal, seeking:

1. To quash the IRD notice dated 2077/02/20.
2. To direct the Government to allow filing and payment at least 30 days after the end of lockdown.
3. To issue an interim order suspending the implementation of the notice.

Subsequently, the IRD issued another notice extending the due date to 2077/3/07 (June 21, 2020), prompting the petitioners to file a supplementary writ against the second notice as well.

Court’s Decision

The Supreme Court granted relief to taxpayers by:

• The Supreme Court issued an interim order directing the Inland Revenue Department (IRD) not to implement the tax filing and payment notice, noting that enforcing it during the lockdown would violate constitutional rights and fundamental human rights, particularly the right to live with dignity.
• Granting an additional 30 days from the end of the lockdown to file tax returns and deposit taxes.

The Court emphasized the balance between state authority and taxpayer rights, noting:

“It is within the realm of legitimate expectation that the state machinery should provide guardianship to all citizens, including taxpayers. Inherent within the provision that ‘No tax shall be levied or collected except by authority of law’ under Article 115 is the principle that taxation should be just and practical. While taxpayers have a duty to pay taxes timely under normal circumstances, the State should provide succor and assistance during abnormal times and periods of hardship.”

Since the final hearing took place after the lockdown ended, the writ petition was quashed as moot. However, the Court’s directive and reasoning set an important precedent in Nepalese tax jurisprudence.

Significance of the Case

• Protection of Taxpayer Rights in Emergencies: Recognized the State’s responsibility to provide relief and support to taxpayers during extreme hardship, such as a pandemic.
• Balancing State Authority and Human Rights: Affirmed that basic human rights and the right to live with dignity can take precedence over routine tax collection obligations during extraordinary circumstances.
• Practical Jurisprudence in Tax Law: Established that tax collection must be just, reasonable, and practicable, reflecting principles of fairness and legitimacy.
• Landmark in Nepalese Tax Law: This case is considered a milestone in public interest tax jurisprudence, highlighting the role of courts in safeguarding citizen welfare during crises.