The Caribbean Court of Justice (CCJ) has ordered the Guyana Revenue Authority (GRA) to repay more than $45 million in taxes deducted from James Ramsahoye in a decades-old action which had its genesis in the 1998 termination of his employment by the now-defunct Linden Mining Enterprise (LINMINE) and Bauxite Industry Development Company Limited (BIDCO).
Additionally, the revenue authority has also incurred a debt of more than US$32,000 in court costs which they have also been ordered to pay to the Appellant.
Ramsahoye has over the last 23 years been engaged in a number of court battles—all related in one way or the other—to his initial action.
Yesterday’s majority ruling of the Trinidad-based court of last resort for Guyana was to an appeal Ramsahoye had filed, contesting the decision and procedure adopted by the GRA to assess and deduct income tax from damages he had been awarded against his former employers who had been found to have breached his contract of service.
The CCJ was asked to determine issues concerning what constituted taxable income under the Income Tax Act and the process and procedural safeguards to which GRA needed to adhere, in ensuring a fair and transparent process conforming to the principles of natural justice.
Ramsahoye had previously been awarded damages of approximately $78 million for breach of contract of service by the Guyana Court of Appeal. Those damages constituted loss of salary for 41 months—until Ramsahoye reached the age of 65—pension for the years 1972-1998, and interest.
The case file revealed the GRA writing Linmine directly in 2004 demanding that it pay GRA the sum of $45,132,975 for income tax which Ramsahoye was alleged to have owed for the years 1990 – 1998; and on the sum awarded by the local appeal court representing the Appellant’s loss of earning—salary for 41 months—in accordance with Sections 93 and 102 of the Income Tax Act.
Linmine had paid the revenue authority the sum by deducting it from the damages owed to Ramsahoye without informing him.
The CCJ noted that Ramsahoye in fact only found out about Linmine’s payment to the GRA when he sought to enforce the judgment against Linmine.
“He was totally denied his right to dispute the GRA’s assessment,” the CCJ said.
Ramsahoye subsequently initiated proceedings against the GRA in the High Court which issued an order quashing the assessment of tax; finding that the damages awarded were not taxable. The GRA then appealed to the Court of Appeal which ordered them to pay the sum into court pending appeal.
After the hearing, the Court of Appeal upheld the quashing order in its entirety. Nonetheless, in its subsequently issued formal order, the court stated that it allowed the appeal in part, presumably on the basis that the Court of Appeal had decided that damages constituted income under s5(b) of the Act.
Delivering the reasons of the majority of the Court, Justice Denys Barrow noted that GRA’s Counsel had acknowledged that the violation of the dispute resolution procedures under the Act nullified the entire assessment, both in respect of the years 1990-98 and Ramsahoye’s loss of earnings.
The CCJ, therefore, noted that because the Court of Appeal had upheld the quashing of the assessment, the matter could have been resolved by a simple application to the court below for an order directing the Registrar to pay the sums to Ramsahoye.
The CCJ explained that success on a ground of appeal does not mean that the appeal is allowed.
The CCJ further went on to say that the decision of a ground is part of the reasoning process that ends with a judgment that either grants or refuses the relief or remedy sought.
The CCJ said that in Ramsahoye’s case, the Court of Appeal’s finding that damages were taxable in principle had no effect on the result, which was the upholding of the quashing order. The CCJ, therefore, found that the order of the Court of Appeal that the appeal was allowed in part, was wrong.
In allowing Ramsahoye’s appeal before it, the CCJ ordered the GRA to forthwith repay him the sum of $45,132,975 together with interest earned on the sum which had been lodged with the Registrar of the Supreme Court dated September 12th 2005.
Additionally, the GRA has been ordered to pay Ramsahoye the sum of US$32,383.39 or its equivalent in Guyana dollars, representing the costs of the appeal.
It had been the contention of Ramsahoye’s attorney—Chandrapratesh Vikash Satram—that the revenue authority’s move to apply taxes now, to sums awarded to his client since 2004, was a breach of the Act.
Satram’s argument was that the Act has a time-bar, so that assessments could not be done and taxed seven years after.
He argued against that background that even if it was taxable back in 2004 when an assessment would have been done at that time, the GRA could not—17 years after—attempt to do any assessment on sums still to be made, in hopes of applying taxes.
Counsel for GRA—Maritha Halley—had made a bid at protecting the Authority’s interest but eventually yielded to her opponent’s position, conceding that Section 72 of the Act is clear and that there was no way around it in the instant case.
She accepted that while the Act does include a proviso, it does not apply in the Appellant’s appeal. The exception applies in instances where fraud or any gross or willful neglect would have been established.
In the absence of those two situations, however, Halley had told the CCJ during the hearing of arguments last November, “unfortunately I will have to concede that Section 72 is clear and will bind the hands of the Commissioner.”
It had been Halley’s position that “in the interest of justice,” the Court should allow the Revenue Authority to now raise an assessment to tax sums still to be paid to the Appellant.
Satram, however, remained resolute that in light of Section 72, the Court should make a consequential order that the Commissioner ought not to now raise any new assessment.
Section 72 states, “Where it appears to the Commissioner-General that any person liable to tax has not been assessed or has been assessed at a less amount than that which ought to have been charged, the Commissioner-General may, within the year of assessment (commencing with the year of assessment 1942) or within seven years after the expiration thereof, assess the person at such amount or additional amount as according to his judgment ought to have been charged, and the provisions of this Act as to notice of assessment, appeal, and other proceedings hereunder shall apply to that assessment or additional assessment and to the tax charges under it.”
Meanwhile, the exception states, “Provided that where any fraud or any gross or willful neglect has been committed by or on behalf of any person in connection with or in relation to tax for any year of assessment, an assessment in relation to such year of assessment may be made at any time.”
The appeal was heard by Justice Barrow along with President of the CCJ Justice Adrian Saunders; and Justices, Jacob Wit, Winston Anderson and Andrew Burgess.
Ramsahoye was employed by the two state-owned corporations LINMINE and BIDCO—in the nationalized bauxite industry, when in 1998, after 26 years of service his employment was terminated.
As a result, he commenced proceedings in the High Court for breach of contract but the action was dismissed and so he appealed.
The Court of Appeal delivered a judgment allowing the appeal and awarded Ramsahoye the sum of US$174,032.49 in damages for breach of contract and monthly pension of US$2,000.72 with effect from 1st July, 1998.
Following the eventual judgment, there were a series of proceedings between Ramsahoye and his former employees—aimed at either preventing the payment of, or enforcement of, the decision, which led to difficulties in Ramsahoye receiving payments.
