KATHMANDU, June 29: The Commission for Investigation of Abuse of Authority (CIAA) on Thursday sought Rs 3 billion as bail  from suspended Inland Revenue Department chief Chudamani Sharma after preliminary investigations established his involvement in a tax waiver scam.  

Sharma, who has already spent 25 days in custody at the anti-graft body, failed to post the bail amount. "Investigation officers decided to let him to go home if he managed to post the set bail amount," said a source privy to the investigations. "But he failed to produce the amount and he is still in our custody." 

A seven-member  team is investigating Sharma's involvement in the scam. As of now, investigators have completed examining 120 documents from the 1,000 files relating to taxes payable by business firms."The Tax Settlement Commission (TSC)  incurred a loss of Rs 9 billion to state coffers through  questionable tax waivers. We decided to set him free if he managed to post bail amounting to one-third of the total loss, as  other members of the commission were also involved," said sources. 

TSC, which was formed by  then finance minister Ram Sharan Mahat to settle tax arrears, landed in controversy after the Office of the Auditor General disclosed that it had waived at least Rs 30 billion in taxes in a questionable ways.  

TSC chairman Lumbadhwoj Mahat and member Umesh Prasad Dhakal are currently at large. Investigators say both of them have already left the country. After several attempts to trace them proved futile, the CIAA has issued a public notice seeking any information about their whereabouts. 

 Sharma was a member of the TSC, which whittled down tax liabilities amounting to Rs 30.52 billion to Rs 9.54 billion for purportedly resolving disputed tax cases. 

Commenting on the tax settlements, the Office of the Auditor General in a recent annual report questioned the rationale for the commission. It said that the settlements were not in cases of disputed tax assessment or in cases under review in court but were only instances of taxpayers simply not paying their tax dues. 

Out of 1,726 applications registered at the TSC in 2071 BS seeking tax waivers, it whittled down the taxes for 1,069 applications.

Sharma was considered close to Lokman Singh Karki when the latter was CIAA chief.

Sources familiar with the Lokman saga say Sharma acted at Karki's behest when the latter was operating to silence his opponents. 

 
• commission for investigation of abuse of authority
 
• rs 3 billion bail amount
 
• custody