CCJ orders GRA to repay $45M in wrongfully-deducted income tax
The Caribbean Court of Justice (CCJ) has ordered the Guyana Revenue Authority (GRA) to repay the sum of Gy$45,132,975 to the Linden Mining Enterprise Limited (Linmine) as wrongfully- deducted taxes from its former employee James Ramsahoye.
The CCJ had allowed Ramshoye’s appeal against the tax authority on November 26, 2021, but issued the reasons for its decision only on Friday.
When the regional court had allowed the appeal, it had ordered that the money belonging to Ramsahoye, which the GRA had deprived him of, should be paid to him.
In an earlier case, Ramsahoye had been awarded by the Court of Appeal of Guyana damages of approximately Gy$78M for breach of contract of service by his former employer. These damages constituted loss of salary for 41 months (until Ramsahoye reached 65 years of age), and pension for the years 1972 to 1998, and interest.
In 2004, the GRA wrote directly to Linmine, demanding that the company pay $45,132,975 for income tax allegedly owed by Ramsahoye for the years 1990 to 1998. On the sum awarded by the Court of Appeal representing Ramsahoye’s salary for 41 months in accordance with Sections 93 and 102 of the Income Tax Act Cap 81:01, Linmine paid the GRA the sum by deducting it from the damages owed to Ramsahoye without informing him. In fact, Ramsahoye found out about Linmine’s payment to the GRA only when he sought to enforce the judgment against the company.
As such, the CCJ said, he was totally denied his right to dispute the GRA’s assessment.
Ramsahoye subsequently initiated proceedings against the GRA in the High Court of Guyana. A High Court Judge issued an order quashing the assessment of tax, and found that the damages awarded were not taxable. The GRA then appealed to the Court of Appeal. “The Court of Appeal 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,” the CCJ noted.
In delivering the majority judgement of the CCJ, Justice Denys Barrow noted that GRA’s counsel acknowledged that the violation of the dispute resolution procedures under the Act nullified the entire assessment, both in respect of the years 1990 to 1998 and Ramsahoye’s loss of earnings.
The CCJ therefore held 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 sum to Ramsahoye. The CCJ explained that success on a ground of appeal does not mean that the appeal is allowed.
According to the CCJ, 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. In this case, the CCJ said, 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 held that the order of the lower court to allow the appeal in part was wrong.
Meanwhile, CCJ Judges Andrew Burgess and Jacob Wit, in their respective reasons, considered whether the damages for breach of contract of services awarded to Ramsahoye were subject to income tax. Justice Wit reasoned that the damages paid to Ramsahoye fell squarely under S 5(b) of the Act, as they constituted compensation for the termination of a contract of employment.
Justice Burgess, on the other hand, found that, the damages being compensatory in nature, were income within the meaning of S5(b) of the Act. However, he stated that the damages could not be said to be derived from employment for the following reasons: (i) the Court of Appeal awarded Ramsahoye income until he reached age 65, and (ii) that the damages were not in respect of any services rendered, but were awarded for his wrongful dismissal.
Justice Burgess further found that Ramsahoye could enforce the return of the sum unlawfully deducted by the GRA, as a taxing authority that erroneously taxes a person could be ordered to repay the money taxed plus interest as a matter of common law. Justice Burgess therefore decided that (i) the principle of unjust enrichment applied, as the GRA was enriched; (ii) the enrichment was at the expense of Ramsahoye; (iii) it was unjust; and (iv) the GRA’s defence that it was acting according to the powers granted to it under the Act was not a defence.
For the above reasons, the CCJ allowed Ramsahoye’s appeal, and ordered GRA to repay the taxpayer $45,132,975, as well as costs in the sum of US$32,383.39 or its Guyanese equivalent.
Apart from Justices Barrow, Wit, and Burgess, CCJ President Adrian Saunders and CCJ Judge Winston Anderson also comprised the Bench. Ramsahoye was represented by Attorneys-at-Law C.V. Satram, R. Satram, and R. Motilal, while GRA was represented by Attorneys-at-Law Judy Stuart-Adonis, H Yasin-Nandlall, M. Halley, F. Hamilton, O. Gordon, and J. Persaud.