CCJ ruling – PPP ignored 12 warnings by COTED on illegal tax
Chartered Accountant, Christopher Ram
Chartered Accountant, Christopher Ram

-Ram knocks Nandlall’s ‘hypocrisy’

CHARTERED Accountant Christopher Ram has pinned the blame for the two mega judgments against Guyana by foreign beverage companies on the PPP administration, disclosing that the

then government had ignored 12 warnings by the Council of Trade and Economic Development (COTED) to drop the illegal tax they had implemented since 1997.

Ram’s comments were contained in a letter to the editor appearing in another section of the media on Tuesday in which he zeroed in on Anil Nandlall’s criticisms of the government for not settling its environmental tax case with SM Jaleel and its subsidiary Guyana Beverage Inc, a decision on which was handed down by the CCJ on May 9. “Had Mr Nandlall disclosed that the root of the problem was the PPP’s failure to withdraw the 1997 tax which became unlawful on the coming into force of the Revised Treaty of Chaguaramas in 2001, his letter would have had more credibility.

In fact, the PPP recklessly ignored 12 warnings from the Council of Trade and Economic Development (COTED) of CARICOM between May 22, 2001 and March 30, 2012, that the tax was a violation of the Revised Treaty of Chaguaramas (RTC). Mr Nandlall places the blame on APNU and the AFC for their failure to support an amendment in 2013, but does not state why the PPP/C did not use its majority prior to 2011 to amend the legislation, or why it did not simply stop collecting the tax after it lost its parliamentary majority, as the CCJ pointed out,” Ram wrote in his letter.

He said it was also important to recall that Nandlall, a former attorney general himself, had argued the similar case brought by RUDISA against the government, but failed to raise important points of law, one of which the CCJ indicated would have been an attractive proposition. “The CCJ ruled in its entirety against Guyana in RUDISA, which was awarded judgment for the full sum of US$6,047,244 they claimed. In the SM Jaleel case, the claim against Guyana was for $2,277 million for the period January 2006 to August 7, 2015. The CCJ ruled, however, that only $1,178 million collected between May 7, 2011 and August 7, 2015 must be refunded. That works out at approximately 52% and after tax adjustment to approximately $700 million,” Ram wrote.

“I believe that Mr Basil Williams was right in taking the case to the CCJ and that Guyana has reason to consider that the ruling was particularly harsh against it. In fact, had the CCJ not rejected two applications by Guyana for reasons that are highly debatable, Guyana would have fared much better. The applications were to produce expert evidence from Dr Maurice Odle and me, and the second a request for documents.” According to Ram, when the CCJ adjudicated on the RTC, it acted under its original jurisdiction where both facts and law are at issue. “This contrasts with non-RTC cases in which it acts under its appellate jurisdiction in which only issues of law are adjudicated on. While the CCJ has considerable discretionary powers, these need to be applied with great care. There was nothing to lose and much to gain by the presentation and examination of the relevant facts,” he said.

He pointed out that Guyana’s defence rested on two limbs, the first passing on ie, that SM Jaleel/Guyana Beverages Inc passed on the tax to consumers and that to allow them to collect from Guyana would have constituted unjust enrichment; and secondly, what lawyers call laches, which is another term for delay in bringing a claim.
“Guyana had what we considered quite compelling evidence that tax was included in cost of sales as disclosed by the financial statements of Guyana Beverages Inc, and that from the very beginning the company had placed an advertisement in Guyana’s national newspapers advising the public that it would be increasing the price of the product by the amount of the environment tax of $10 per bottle.

Yet, the court ruled that for Guyana to have succeeded in its passing-on defence, it had to produce evidence that the tax was separately itemised on the invoice. The CCJ was clearly unaware that other than in the case of Value Added Tax, it is highly unusual that indirect taxes are separately itemised on an invoice. We would also have led accounting evidence to support Guyana’s case.”
The attorney general in a statement last Saturday said the CCJ ruling was a victory for Guyana, noting that taxpayers will no longer have to bear “the full burden of the lawlessness” of the previous administration.

In handing down its judgment on Tuesday in the case – SM Jaleel and Guyana Beverages Inc. v the State of Guyana – the CCJ ordered Guyana to pay a collective sum of Environmental Tax for the period March 7, 2011, to August 2015, together with four per cent interest per annum. Ahead of the judgment, the companies had argued that Guyana had breached the principles of trade liberalisation and free movement of goods envisioned by the Revised Treaty of Chaguaramas (RTC) – the treaty which established the Caribbean Community (CARICOM) and the CARICOM Single Market and Economy (CSME). As such, they were claiming a refund of the environmental taxes imposed on the companies during the period January 1, 2006, to the date of repeal of the Act in August 2015.

Williams said when the APNU+AFC Government assumed office in May 2015, it inherited the unpaid judgment of over US$6M or GY$ 7.2 Billion awarded against the PPP/C Government by the CCJ. In other words, Guyana was destined to reimburse S.M. Jaleel a similar sum of over US$6M. He said for the two defences argued by the attorney general on behalf of Guyana , two points were noted: that S.M. Jaleel & Company Limited/ Guyana Beverages Inc had passed on to the consumers the Environmental Tax and for the country to reimburse them, would be to unjustly enrich them.

In addition, it was noted that on the issue of “Laches,” the companies had sat on their rights and failed to challenge Guyana’s collection of the said tax at the earliest opportunity, and were therefore barred by ‘Laches’ from maintaining any claim. The recent ruling would see the Trinidadian company obtaining only reimbursement for four instead of nine years — a sum which would be subject to Corporation Tax of 40 per cent — less than half of their claim.
“The court finds that a period of five years is neither too long nor unduly short for a claimant to commence proceedings. The court considers that this time limit will protect states from being vexed by claims relating to long-past incidents about which their records may no longer be in existence; and as to which their witnesses may well have no accurate recollection,” the CCJ explained.

Surinamese entity, Rudisa Beverages, had taken the PPP Government to court over the “discriminatory” Environmental Tax a few years ago. The company had argued that there was an imposition of $10 on every disposable container imported into Guyana. They eventually won the case, by arguing that a similar tax was not imposed on local distributors such as Banks DIH and Demerara Distillers limited. “All of this happened because of the ineptitude of the PPP Government,” Williams said of the recent CCJ ruling.


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