A lawsuit has been filed by Banks (DIH) against the Guyana Revenue Authority, (GRA) for some 28.5 billion worth of consumption taxes and interest which the company says it overpaid to the tax body due to a legal error.
The beverage company is claiming the sum as a refund for the period of 2001 to 2007.
During a press conference yesterday, People Progressive Party/Civic General Secretary, Bharrat Jagdeo commented briefly on the issue.
He stated that the APNU/AFC Government had set a bad precedent by settling a court matter with another beverage company (Demerara Distillers Limited) DDL. The Opposition Leader opined that the court action vindicates his stance on the matter.
That case involved a legal challenge launched in the High Court by DDL in 2002, to the assessment by the Commissioner General of the Guyana Revenue Authority, of consumption taxes owed by that company in a sum exceeding $1 billion, for the period January 2001–September 2002.
Now Banks DIH is claiming its sum on the basis of overpaid consumption taxes and interests due to a legal mistake.
The company essentially calls the issue one of unjust enrichment, since GRA claimed the monies from them as consumption taxes while another beverage dealer (DDL) gets a settlement worth more than $12 billion with increases.
The Opposition Leader had pegged the issue as a loss to the treasury by this settlement, at approximately $20 billion. Among the reasons he advanced, is that the company’s tax liability to the State declined with the passage of time.
Former Attorney General Anil Nandlall also weighed in on the issue.
He noted that the administration “has demonstrated such an incomparable proclivity and haste to dole out public funds and write off debts owed to the State, that it puts a strain on the rational mind not to conclude, that either incompetence overwhelms or, that there is a corrupt motive, or both”.
According to Nandlall, the legal challenge was launched by DDL in 2002 for consumption taxes owed by that company in a sum exceeding $1 billion, for the period January 2001-September 2002.
It was eventually quashed by the High Court on the 1st of February, 2005. GRA appealed that decision to the Court of Appeal.
On the 31st of July, 2008, the Court of Appeal dismissed this appeal on the ground that the Commissioner General had used a wrong formula for the calculation of the consumption taxes.
The Court prescribed a formula to be used. In 2009, the Commissioner General, utilizing the Court-recommended formula, assessed DDL’s consumption tax liabilities for the period 2001-2007 (since after 2007 Consumption Tax was abolished with the introduction of VAT). The newly assessed liability of DDL for that period was in excess of five billion dollars.
Again, he said DDL filed legal proceedings challenging this assessment. According to Nandlall, the GRA retained external Senior Counsel and was steadfastly defending this challenge when this Government took office.
“Instead of continuing to defend GRA’s assessment done in accordance with the Court of Appeal’s formula, this Administration settled these proceedings, for the paltry sum $1.5 billion and gave DDL more than a year to pay.
So, after fifteen (15) years of litigation, with DDL having the use of several billion dollars of State funds, interest-free, this Government settles for $1.5 billion. The Opposition Leader, an expert in the financial field, pegged the loss to the treasury by this settlement, at approximately $20 billion.”
The former Attorney General had predicted that a significant consequence of this settlement is that Banks DIH Ltd, who in like circumstances, paid billions of dollars in consumption taxes, assessed by the Commissioner General, utilizing the same method used to calculate DDL’s Consumption Tax liabilities, has signaled an intention to claim a refund of consumption taxes paid.
“Banks paid far more consumption tax than DDL as their production line is larger. Therefore, the refund that will be sought will be several times the $5 billion for which DDL was assessed.
To sum it all up, the settlement of this one case is likely to cost the taxpayers over $50 billion,” he had said.
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