SC Rules in Favor of Government, WorldLink to Pay Rs 2 Billion in Taxes

The Supreme Court has dismissed all eight writ petitions filed by Internet service provider (ISP) WorldLink Communications Ltd. This decision clears the path for the government to recover outstanding tax dues from the company and other ISPs, marking a pivotal moment in the ongoing dispute over taxation in the telecommunications sector.

A division bench comprising Justices Hari Prasad Phuyal and Dr. Nahakul Subedi deliberated on the matter and quashed all petitions brought forth by WorldLink. These petitions had contested the government’s imposition of taxes on maintenance fees levied on consumers.

The crux of the disagreement lies in whether ISPs should be exempt from paying taxes on maintenance fees. While the government had initially granted a one-year reprieve to ISPs, it stood firm on its stance that existing laws mandate the taxation of maintenance fees.

WorldLink’s legal battle dates back four years when it first filed a writ petition in response to the Ministry of Communications and Information Technology’s directive to recover outstanding tax dues from ISPs.

The intensity of the standoff escalated as the Nepal Telecommunication Authority (NTA) took measures to compel ISPs to settle their dues. Denying them recommendations for foreign exchange payments, the NTA’s actions even resulted in a nationwide Internet blackout for a day as upstream providers suspended services due to delayed payments.

With the apex court’s verdict, WorldLink is now facing a substantial tax bill amounting to nearly Rs 2 billion. This ruling has broader implications as it sets a precedent for other ISPs, who also owe significant sums in unpaid taxes to the government.