Colombo, 10 September 2026 – In a significant ruling that underscores the critical importance of statutory timelines in tax administration, the Court of Appeal has set aside a tax assessment against Amana Takaful PLC, declaring it null and void due to being time-barred. The judgment, delivered by Justices M.C.B.S. Morais and Annalingam Premashanker, effectively allows Amana Takaful PLC’s self-assessment for the taxable period 2012/2013 to prevail, involving a disputed income of Rs. 45,552,100.00.
The landmark decision, issued today, stems from an appeal by way of Stated Case under Section 11A of the Tax Appeals Commission Act No. 23 of 2011 (as amended), challenging the determinations of both the Tax Appeals Commission (TAC) and the Commissioner General of Inland Revenue (CGIR).
Background to the Dispute
The case, CA/TAX/19/2023, originated when Amana Takaful PLC, a public limited liability company engaged in family and general Takaful insurance, submitted its tax return for the 2012/2013 taxable period. The company claimed certain deductions which were subsequently rejected by the Commissioner, Bank and Financial Services unit of the Department of Inland Revenue (the Assessor) via an intimation letter dated 13th November 2015. A Notice of Assessment was then issued on 30th November 2015.
Aggrieved by this assessment, Amana Takaful PLC appealed to the Commissioner General of Inland Revenue, who upheld the Assessor’s decision on 9th January 2018. The company then escalated the matter to the Tax Appeals Commission (TAC), primarily arguing that the assessment was time-barred. However, the TAC, in its determination dated 28th November 2022, ruled in favour of the Respondent, the Commissioner General of Inland Revenue.
Dissatisfied with the TAC’s stance, Amana Takaful PLC requested a Stated Case to the Court of Appeal, raising several questions of law. Among these, the central question revolved around the assessment being time-barred.
The Crucial Question of Law: Timeliness of Assessment
The Court of Appeal’s deliberation primarily focused on Question of Law No. II:
- “Is the assessment time barred by operation of law under and in terms of section 163 (5) of the Inland Revenue Act, No. 10 of 2006 (as amended)?”
Amana Takaful PLC contended that while the Notice of Assessment was dated 30th November 2015, it was received by them on 21st December 2015, which they argued was beyond the two-year statutory period prescribed by Section 163(5) of the Inland Revenue Act, No. 10 of 2006 (IRA 2006) for tax returns made prior to 1st April 2013. The Assessor was required to issue the assessment on or before 30th November 2015.
Conversely, the Respondent and the TAC maintained that the two-year limitation applied only to the ‘making of the assessment’ and not to the subsequent ‘notice of assessment’ issued to the taxpayer. They cited English case law, *Honig vs. Sarsfield*, to support this distinction.
Court of Appeal Rejects Distinction Between ‘Making’ and ‘Notifying’ Assessment
The Court of Appeal, comprising Justices Morais and Premashanker, carefully examined the provisions of the IRA 2006. While acknowledging the Notice of Assessment was dated 30th November 2015, the Court observed the lack of evidence regarding the exact date of receipt by Amana Takaful PLC. Critically, the Court invoked Section 194(3) of the IRA 2006, which states that any notice sent by post is deemed served on the day succeeding the day it would have been received in the ordinary course of post.
Applying this, the Court reasoned that even if the notice was posted on 30th November 2015, the earliest it could have been received by the Appellant would have been 2nd December 2015, which is unequivocally after the statutory deadline of 30th November 2015. The Court emphasized that Section 194(2) of the IRA 2006, which mandates personal service or registered post for notices of assessment, reinforces that the time limit in Section 163(5) applies to both the intimation letter and the subsequent Notice of Assessment.
The Court further asserted that the contention of the Respondent and the TAC that “making of an assessment” and “notice of assessment” are distinct matters cannot be accepted. This stance was bolstered by the recent Supreme Court judgment in *Fonterra Brands Lanka (Private) Limited V. The Commissioner General of Inland Revenue (SC Appeal 187/2014, decided on 26th September 2025)*, where His Lordship Thurairaja PC, J. held that the assessment process is only complete when the taxpayer is both assessed and required to pay, and the communication of reasons and the notice itself must occur within the statutory deadline.
Echoing the Supreme Court’s reasoning, the Court of Appeal concluded that the issuance of the Notice of Assessment constitutes an integral part of the single assessment process, and its communication to the taxpayer within the prescribed timeframe is mandatory for its validity.
Outcome and Implications
Based on this comprehensive analysis, the Court of Appeal answered Question of Law No. II in the affirmative, ruling that the assessment made by the Assessor was indeed time-barred. Consequently, the Court set aside the determination of the TAC dated 28th November 2022 and the determination of the Commissioner General of Inland Revenue dated 9th January 2018.
The assessment dated 30th November 2015 issued by the Assistant Commissioner of the Department of Inland Revenue was declared null and void, meaning Amana Takaful PLC’s self-assessment for the 2012/2013 taxable period will now stand. The Court found no need to address the remaining questions of law raised by the Appellant, as the invalidation of the assessment rendered them moot.
Counsel Dr. Shivaji Felix, PC, with Nivantha Satharasinghe, Sajith Nawaratne, and Asoka Obeysekera, instructed by Abdeen Associates, appeared for the Appellant. Chaya Sri Nammuni, DSG, with A. Jayakody, SC, represented the Respondent.
This judgment serves as a vital precedent, reinforcing the principle that tax authorities must adhere strictly to statutory timelines in the assessment process, ensuring certainty and due process for taxpayers in Sri Lanka.
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