…High Court rules
A HIGH Court Judge has ruled that a decision by the Guyana Revenue Authority (GRA) to demand over $5M in additional duties and taxes from a Chinese importer was unlawful and has ordered the entity to pay the importer costs.
The importer, Shanglin Lin, is engaged in the importation of sanitary products manufactured in China. Between January and July 2019, he imported several containers of diapers on which duty was assessed, paid and the goods were released and sold within a few months of arrival.
By a letter dated January 3, 2020, GRA wrote to Shanglin demanding that he pay the sum of $5,763,755 in additional duties and taxes in respect of the containers imported between January 2019 and July 2019 on or before the January 14, 2020.
The letter indicated that the demand was premised on “anomalies” and listed transactions going back to January 2019 for which duty was already fully assessed and paid, however, the letter failed to identify any of the anomalies or how the additional duties and taxes were calculated.
The GRA’s Deputy Commissioner and Head of the Customs Excise and Trade
Operations Division, Patrick Hyman, in a sworn affidavit stated that a “post clearance limited scope audit” of the declarations was conducted by GRA after it was observed that the declared values for the items imported by Shanglin were low in comparison to other importers of similar products.
Hyman contended that there was a series of correspondence between Shanglin and GRA whereby the revenue authority requested documents pertaining to several shipments but those were never delivered. Shanglin was also invited to meet with GRA, but did not attend, and was informed of the review.
The Deputy Commissioner noted that Shanglin’s broker later submitted copies of the e-SAD’s commercial invoices, bills of lading and custom payment receipts, however, those were already in GRA’s possession and were insufficient to establish the transaction values.
In absence of the records to verify the transactions values, GRA located importers of similar products as Shanglin to be used as comparators for transaction values of similar goods; this is the third method of valuation detailed in the Fifth Schedule of the Customs Act. They then used a transaction value by a competitor to establish the true and correct value for Shanglin’s goods.
The GRA relied on Section 17(2) of the Customs Act which authorises them to make demand for short levied duty and “upon failure of the individual to comply with the demand, certify upon any entry, specification or shipping bill subsequently presented to a proper officer by that individual, the particulars of the amount demanded.”
They also relied on Section 233 of the Customs Act which authorises them to request and inspect invoices, books of accounts and any other documents, provided that the request is made within three years of the date of importation.
Additionally, they relied on Regulation 36 of the Customs Regulations made under Section 275 of the Customs Act which also authorises them to demand any books of account or other documents, and Regulation 204W which stipulates that an officer shall make such audit or inspection of the books and papers … regarding specific customs transactions for the purpose of protecting importers or revenue.
However, High Court Judge, Justice Fidela Corbin-Lincoln, reasoned that section 17 (2) of the Customs Act does not by itself expressly empower GRA to carry out an “audit” or reassessment of Shanglin’s goods in the manner it did.
“I therefore find that the respondent’s “audit” and or reassessment of duty on the Applicant’s goods imported and entered between January and July 2019 and the consequent demand for additional duties as a result of the applicant’s failure to provide requested documents purportedly pursuant solely to Section 17 (2) of the Act is ultra vires and unlawful,” she ruled.
Further, she reasoned that while Section 233 gives the respondent the power to demand and examine a wide range of documents even after goods have entered which can be termed as an audit, there is no power conferred by Section 233 to take the action which GRA took.
“I do not find that there is any power conferred by Section 233 to conduct a “review” in accordance with the Fifth Schedule or any other part of the Act for failure to provide requested documents,” she held.
The High Court judge held that the only sanction imposed by Section 233 for failure to provide documents requested after goods have entered is a fine and further Regulations 34 and 204W impose no sanction for failing to provide requested documents or failure to submit to the audit and inspection.
She ruled that GRA failed to establish the statutory basis upon which it embarked upon a reassessment of duty, including the methodology used to do so and the statutory basis upon which it was determined that the goods were “short levied” for the purposes of Section 17 (2) was also not established.
The judge ruled that costs in favour of Shanglin shall be assessed if not agreed within 21 days, and if not agreed, Shanglin shall file and serve a Bill of Costs on GRA by November 26, 2021.
The GRA had also blocked Shanglin from electronically filing Customs Entries and Declarations with the ASYCUDA system operated and maintained by the revenue authority, this decision was also declared unlawful by the court.
