Kathmandu-The Khukhuri Rum manufacturer ‘Nepal Distilleries Private Limited’has been found guilty of evading taxes amounting to over Rs 608.422 million over three fiscal years.

The Nepal Distillerie, with the investment between entrepreneurs Basanta Chaudhary and Sharad Kumar Tibarewala, evaded multiple taxes during the fiscal years 2017-18, 2018-19, and 2019-20. The evasion involved Value Added Tax (VAT), excise duty, income tax, and advance tax deductions.

The Large Taxpayers Office under the Inland Revenue Department assessed additional taxes on The Nepal Distilleries. In the fiscal year 2019-20, the office assessed additional taxes of Rs 2.8 million under excise duty and Rs 28.9 million under VAT.

Similarly, in the fiscal year 2018-2019, the office determined additional taxes of Rs 14.7 million under VAT and Rs 8.3 million under income tax.

In the fiscal year 2017-18, the office assessed additional taxes of Rs 59.2 million under VAT, Rs 419.1 million under income tax, and Rs 27,208 under the Advance Tax Deduction (ADDT) heading.

Disappointed with the tax assessment made by the Tax Office, The Nepal Distilleries sought administrative review under the Inland Revenue Department. However, the tax assessment made by the Tax Office was upheld through the administrative review as well.

In response to the administrative decision, ‘The Nepal Distilleries’ initiated a writ petition with the Revenue Tribunal on July 7, 2024. After an 18-month period, the writ petition filed by the company was upheld by the Joint Bench of the Revenue Tribunal, affirming the decision of the Administrative Review. The decision was rendered by the Chairman of the Tribunal, Brajesh Pyakurel, and the Revenue Member, Hari Prasad Timilsina.

Subhash Lamichhane, Director of ‘The Nepal Distilleries’, stated that these are typical tax matters. ‘The Tax Office may have made the assessment based on the audit conducted, but we proceeded with the case without addressing the objections,’ Lamichhane explained.

He further indicated that new measures will be implemented only after considering the nature of the case.

‘The Nepal Distilleries,’ a 66-year-old company, is a producer of Khukuri Rum. The company was sold in 2018 for Rs 1.61 billion. Following the sale, which was long-term ownership by Indian investors, 80 percent of its shares were transferred to the investment group of Sharad Kumar Tibarewala, residing in Singapore, while 20 percent were transferred to Basant Kumar Chaudhary, the director of Norvic Hospital.

The history of Khukuri Rum is intricately connected to ‘The Nepal Distillery,’ established by Jamshedji R Contractor in 1959. Founder Jamshedji had also established distilleries in Nepal, Bhutan, and Sikkim.

Before the sale, the company was owned by India's PDK Impex. 55 percent of PDK Impex's shares were purchased by Pashupati Planners and 45 percent by MSC Holdings in 2018 and 2019. Pashupati Planners was jointly owned by Basanta Chaudhary's BLC Holdings and Sharad Kumar Tibarewala, while MSC Holding was fully owned by Tibarewala.

Both companies had purchased shares at Rs 28,329.11 per share. Thus, at that time, 55 percent shares were sold for Rs 893 million and 45 percent shares for Rs 719.6 million, bringing the total transaction value to Rs 1.61 billion.

The Nepal Distilleries, a long-standing producer of Khukuri rum, has been exporting in international market.