Chancellor upholds GRA’s power to levy post-clearance taxes

…ruling directly contradicts Justice Gino Persaud’s decision in Lamborghini case – AG

Chancellor of the Judiciary (acting) Roxane George on Monday ruled that the Guyana Revenue Authority (GRA) can impose post-clearance taxes, a decision that starkly contradicts that of Justice Gino Persaud just days ago.
On November 17, Justice George, who previously served as Chief Justice (acting), ruled in a case brought by businessman Zhangzhen Yu against the GRA, challenging, among other things, the tax body’s re-assessment and the payment of import duties which were assessed by its Post Clearance Audit Unit (PCAU) of the Customs Division.
According to the particulars of the case, which were released by the Attorney General’s Chambers on Tuesday, the applicant imported various items of merchandise on diverse dates during the period 2016 to 2017. The goods were entered and duties paid based on invoices submitted by the applicant to and assessed by the GRA. Thereafter, the goods were released to the applicant. Eighteen months after the last transaction on 23 November 2017, the applicant received a demand letter dated 22 March 2019 signed by Patrick Hyman, Deputy Commissioner, Customs, Excise and Trade of the GRA claiming $15,475,006 as additional duties and taxes on 12 containers of goods imported between November 2016 and October 2017 in relation to the shipments that had already been cleared, paid for and released.

Post audit clearance & collection additional taxes
But Justice George, in her judgement, said “I do not consider the complaint that the assessment by the PCAU was unlawful has merit. The PCAU is clearly a department within the GRA. There is no evidence to support the contention that this unit is without statutory power, illegal and unlawful, and there is most certainly no evidence that it is unconstitutional.”
She also recognised GRA’s explanation that although the goods were released, all the containers had not been fully examined and that pursuant to Section 233 of the Customs Act, it can review declarations and other documentation within three years of the initial submission by an importer and request additional documentation.
She also ruled that “the post audit clearance allows for the collection of additional taxes where the inspection of the documents reveals that there has been a short levy. However, the applicant counters that the issue of a short levy only applies where there has been an error in the classification of goods or the rate of duty on entry. I do not agree. Section 17 is not so restrictively worded.”

Contradicts Justice Persaud
Speaking on this matter during his programme “Issues in the News” on Tuesday, Attorney General Anil Nandlall highlighted that this ruling by the now Chancellor of the Judiciary goes against the one delivered by Justice Persaud in the case brought by the GRA against US indicted businessman Azruddin Mohamed.
“I have just shared with you a judgement granted only yesterday by the Chancellor of the Judiciary of Guyana (for) when she was sitting as Chief Justice acting and this judgement absolutely contradicts in every material respects the judgement of the Honourable Justice Gino Persaud,” he remarked.
“So last week, Justice Gino Persaud ruled that the post-clearance audit system being administered by the Guyana Revenue Authority is unlawful and that the Guyana Revenue Authority doesn’t have the legal power to conduct a post-clearance audit. He further ruled that the post-clearance audit is not provided for in the laws of Guyana. And he granted a number of reliefs in that case that is now very popular in the public domain,” Nandlall further outlined.
Justice George, on the other hand, Nandlall noted, found that “the post-clearance audit unit…is provided for by the law. It is not illegal and it is not unconstitutional.”
Nandlall also pointed out that Justice George ruled that Section 17(2) of the Customs Act permits the reassessed value to be levied against duty liable to be paid regarding goods imported, and that GRA could apply its enforcement provisions to effect compliance with the demand notice.
On Friday last, Justice Persaud blocked the GRA from retroactively reassessing taxes owed on the undervalued Lamborghini imported by Mohamed.
The decision came in the civil case filed by the GRA earlier this year after it was discovered that there is official documentation indicating that the vehicle cost US$695,000 – far above the US$75,300 initially declared by Mohamed in his tax filings for the vehicle at the time of importation.
However, it was not until May 13 that the GRA received the evidence. The invoice was stamped as paid. The particulars of the Lamborghini identified in the invoice were the same as Mohamed’s Lamborghini. The newly uncovered evidence triggered a post-clearance reassessment by the GRA and a demand for additional taxes.
Nandlall reiterated during his programme on Tuesday that Justice Persaud’s ruling cripples State’s power to recover taxes.
“We have about 100,000 containers entering Guyana every year. If the customs officers are not allowed to offer facilities such as post-clearance audit facilities, and what is called prior to processing, then containers may have to spend months on the wharf. Post-clearance audit simply means that your invoices that you present are accepted, and the values that you declare are accepted as prima facie value, and the customs department, the Guyana Revenue Authority, reserves the right to come back if they find discrepancy, if they find that you have been short levied your taxes, if you have paid short taxes, or worse yet, if you have committed fraud or you have made fraudulent declaration…the Guyana Revenue Authority, has the right to… reassess and come back and recover from you the short taxes that you paid,” he stated.
The GRA has already signalled its intention to appeal Justice Persaud’s ruling.