B lawsuit
… GRA says no statement of claims filed, Govt to fight case
Attorney General Basil Williams declared Banks DIH Limited will be fighting a lost cause against the country’s tax authority, guaranteed that all efforts will be exhausted to ensure not a dime comes out of the national treasury to refund the beverage giant, which has filed a $28B lawsuit against the GRA to be given the same tax treatment as its competitor DDL.
Williams at a press conference on Wednesday contended that the time has passed for the beverage company to take any actions against the Guyana Revenue Authority (GRA), even in light of the extravagant tax write-off granted to the Demerara Distillers Limited (DDL) last year.
“You must always remember in tax matters, there is a statutory limitation, you can’t sit on your rights and hope that the cost keeps increasing and then you come 10 years later. You have three months within which you must bring an action,” the Attorney General asserted.
Moreover, Williams argued that he was wrongly named co-defendant in the matter because the settlement of tax cases falls outside of his jurisdiction.
“The GRA is an independent institution and not a Government department so the Attorney General whose remit is to represent the Government departments and the aspects of Government sectors, Ministries, etc, would not come under that,” he explained.
Nonetheless, given that the legal proceedings filed by Banks DIH could result in a significant depletion in the Treasury’s balance, the Attorney General said he would lend his assistance to ensure the GRA wins the case. 
“I will give all and every assistance that is necessary in protecting the Government’s coffers, the taxpayers’ coffers,” he stated.
GRA’s take
Meanwhile, the Guyana Revenue Authority in a statement late Wednesday evening stated that Commissioner- General Godfrey Statia has indicated that the tax body was served with a Writ of Summons dated December 16, 2016, by Banks DIH Ltd.
The statement added that the beverage company is seeking declarations that Consumption Tax paid for periods 2001 to 2006 were paid under a mistake of law. Alternatively the Company seeks an Order for repayment by the Government of Guyana of the said taxes. To date the Company has not filed its Statement of Claim in the matter, the GRA said.
According to the revenue authority it will respect the Court’s jurisdiction by not litigating issues of law in the public domain.
Lawsuit
Banks DIH on December 16, 2016, filed legal proceedings against the Attorney General and the GRA, claiming over $28 billion in repayments in light of the $3.8 billion tax write-off granted to its competitor, the DDL.
DIH paid some $12.8 billion in taxes over the period 2001 to 2006. But in light of the DDL tax write-off last year, the beverage giant calculated that it should have only paid some $3 billion.
The company argued that the Government would be “unjustly enriched” if it retained the approximately $9 billion (the difference between the paid amount in taxes and the net figure Banks DIH estimated it should have paid).
In this regard, Banks DIH claims that it is entitled to some $9 billion plus 10 per cent interest compounded over the period 2001 to 2006 resulting in a total of some $28 billion after taking into account the settlement figure payable by DDL of $1.5 billion.
In 2002, a legal challenge was launched by DDL against the GRA over its assessment by the Commissioner General of consumption taxes owed by that company in a sum exceeding $1 billion, for the period January 2001 to September 2002.
It was eventually quashed by the High Court on February 1, 2005. The GRA appealed that decision in the Court of Appeal.
On July 31, 2008, the Court of Appeal dismissed this appeal on the ground that the Commissioner General had used a wrong formula for the calculation of the consumption taxes.
The Court prescribed a formula to be used.
In 2009, the Commissioner General, utilising the court-recommended formula, assessed DDL’s consumption tax liabilities for the period 2001-2007 (since after 2007 Consumption Tax was abolished with the introduction of Value Added Tax). The newly assessed liability of DDL for that period was some $5.3 billion.
Again, DDL filed legal proceedings challenging this assessment.
According to the records, the GRA then retained an external Senior Counsel and was steadfastly defending this challenge when the A Partnership for National Unity/Alliance For Change (APNU/AFC) coalition assumed office.
Instead of continuing to defend Government’s case against DDL, the beverage company was granted a $3.8 billion tax write-off, having only to pay $1.5 billion.
Therefore, after about 15 years of litigation, with DDL having the use of several billion dollars of State funds, interest-free, the APNU/AFC Government settled for $1.5 billion.
