Bata Shoe Company Guyana, Ltd et Al v Commissioner of Inland Revenue and Attorney General Diamond Liquors Ltd et Al v The Commissioner of Inland Revenue and Attorney General
| Jurisdiction | Guyana |
| Judge | Massiah, J. |
| Judgment Date | 15 January 1975 |
| Neutral Citation | GY 1975 HC 3 |
| Docket Number | 174 of 1971 |
| Court | High Court (Guyana) |
| Date | 15 January 1975 |
High Court
Massiah, J.
174 of 1971
1453 of 1971
Mr. C.L. Luckhoo, S.C., Mr. J. King and Mr. C. Denbow with him for the plaintiffs.
Dr. M. Shahabuddeen, S.C., Attorney General Mr. J. Nurse, Mr. D. Sharma and Mr. R. Mangal with him for the defendants.
Constitutional Law - Legislation — Retroactive effect — Income Tax Act — Act held to be in breach of Art. 10(4) of Constitution in that a taxpayer could be held guilty of an offence in January 1970 by a law which came into force on December 12, 1970.
On 22nd December, 1969, the Minister of Finance delivered his Budget Speech in Parliament. It was the year preceding the momentous one in which Guyana became a Cooperative Republic and in a wide-ranging speech the Minister reflected on the Country's past achievements and dealt with future development goals. He drew attention to the inadequacies of the present tax system in relation to the needs of the society and expressed the view that the time had come when banks, insurance companies and other institutions should play a different role in the scheme of things.
He had occasion to say as follows:
“The course is being charted towards a broadened tax base, mobilisation of financial resources and some direction as to areas where savings should be channelled. Banks, Insurance Companies, large companies and corporations and other institutions are being called upon to play a more meaningful role in keeping with the development of Guyana and her people.”
Later in his speech the Minister said as follows:
“That revenue grew at roughly the same rate as Gross Domestic Product despite new tax measures is a clear indication that the revenue has not been readily responsive to certain kinds of taxes. It also carries the clear implication that fiscal measures must now have a different emphasis, and must demonstrate a new vigilance to identify avenues of seepages and to close them.”
Later he spoke of Government's budgetary proposals for the year 1970 and of the need to exercise some measure of control over the operation of insurance companies and the intention to introduce a corporation tax, a withholding tax, and a tax on the surrender of insurance policies. He referred also to the fact that many taxpayers delayed payment of income tax by lodging frivolous appeals against assessment and said that it was intended that in future those who wished to appeal to the Board of Review shall first deposit two-thirds of the tax assessed while those who wished to appeal to a judge in chambers shall first deposit the whole of the tax assessed. There was given therefore a clear, direct and unequivocal warning of things to come, though it is almost unnecessary to state that the Budget Speech could not be authority for the collection of taxes as from the date of the Speech or otherwise. See Bowles v. Bank of England [1913] 1 Ch. D. 57. Indeed, those budgetary proposals were implemented by the Insurance Act, 1970, (No. 25 of 1970) which was passed by the National Assembly on 2nd November, 1970, and received the President's assent on 20th November, 1970, and by the Corporation Tax Act, 1970, (No. 30 of 1970) and the Income Tax (Amendment No. 2) Act, 1970, (No. 31 of 1970) both of which were passed by the National Assembly on 9th December, 1970, and received the President's assent on 12th December, 1970. Having regard to the Minister's Budget Speech the previous year no one could truthfully say that he was taken by surprise. The Corporation Tax Act, 1970, and certain sections of the Income Tax (Amendment No. 2) Act, 1970, were deemed to have come into operation with respect to and from the year of assessment commencing 1st January, 1970.
On 9th January, 1971, twenty-five companies launched action No. 174 of 1971 challenging the validity of those laws. Their complaints set out in the Statement of Claim of thirty-eight paragraphs are numerous. Not all of them were argued and attention will be focussed in this judgment on the specific sections of the laws complained of before me. The plaintiffs have sought a number of declarations but the essence of their prayer is a declaration that the laws are invalid and that an injunction be ordered restraining the first-named defendant and the officers of his department from enforcing any of the provisions of those laws.
One of the matters complained of in action 174 of 1971 was the retrospective effect of several sections of the Income Tax (Amendment No. 2) Act, 1970. Parliament however sought to change this situation by certain provisions of the Miscellaneous (Fiscal Enactments) (Amendment) Act, 1971, (No. 25 of 1971) passed by the National Assembly on 29th December, 1971, and assented to on 31st December, 1971. On 20th May, 1972, in action 1453 of 1972, twenty-three companies questioned the validity of those provisions as well as certain provisions of the Insurance Act, 1970. The plaintiffs have sought a declaration that those provisions are invalid and of no effect.
Actions 174 of 1971 and 1453 of 1972 were heard together. An agreed Statement of facts was filed. The laws which are challenged are the Insurance Act, 1970, the Corporation Tax Act, 1970, the Income Tax (Amendment No. 2) Act, 1970, and the Miscellaneous (Fiscal Enactments) (Amendment) Act, 1971. At the hearing counsel for the plaintiffs said that they were no longer challenging the Insurance Act, 1970, and arguments proceeded in relation to the other enactments.
The arguments of counsel for the plaintiffs can be classified under four main heads, namely Unconstitutionality, Natural Justice, Retrospectivity and Uncertainty of draftsmanship but not unnaturally the arguments under one head sometimes had relevance to or some connection with other heads. But the arguments in respect of unconstitutionality were the most pervasive.
When these proceedings were initiated the present revised Laws of Guyana had not yet been published. Reference was therefore made in the pleadings to the Kingdon edition of the Laws, and for that reason I thought it more convenient to refer to that edition but inserted in parentheses the corresponding references to the present edition.
The Income Tax Ordinance (Cap. 299) (now the Income Tax Act, Cap, 81:01) was passed in 1929. Under section 48 thereof (now s. 70) the Commissioner of Inland Revenue is empowered to assess the tax due to be paid by a taxpayer. Under section 56(2) (now s. 78(2)) a person who is dissatisfied with the assessment may object to it and ask the Commissioner to review his assessment. If on review the taxpayer still does not agree with the Commissioner's assessment he may, under section 57 (now s. 86), appeal against the assessment to a judge in chambers. That was the position until 1956 when section 12 of the Income Tax (Amendment) Ordinance, 1956, (No. 22 of 1956), amended the principal Ordinance by inserting section 56A (now s. 79) under which was established and constituted a Board of Review to hear assessment appeals. By virtue of the said section 12 there were also inserted sections 56B, C, D, E, F and G which provided for a number of matters in relation to the functioning of the Board. Under section 56D (now s. 82) any person who is aggrieved by an assessment made upon him by the Commissioner and having objected to the assessment fails to agree with the Commissioner's assessment on review may appeal against the assessment to the Board of Review.
Section 13 of Ordinance 22 of 1956 repealed and re-enacted section 57(1) of the principal Ordinance; thereupon s. 57(1)(a) (now s. 86(1)(a)) read as follows:
“57(1) (a) Any person who, being aggrieved by an assessment made upon him, has failed to agree with the Commissioner in the manner provided in subsection (5) of section 56, or having appealed to the Board under the provisions of section 56D, is aggrieved by the decision of such Board, may appeal against the assessment or decision as the case may be to a judge in chambers upon giving notice in writing to the Commissioner within thirty days from the date of refusal of the Commissioner to amend the assessment as desired or within thirty days after the date of the decision of the Board as the case may be.”
After the enactment of the Income Tax (Amendment) Act, 1956, the position therefore was that a taxpayer who was dissatisfied with the Commissioner's assessment could appeal in the first place either to the Board of Review or to a judge in chambers. If, however, he appealed to the Board of Review and was dissatisfied with its decision he could then appeal therefrom to a judge in chambers. The position today is the same (s. 86(1)(a)).
Under subsection (5) of section 56D a person who appealed to the Board of Review had to lodge the sum of five dollars which was returned to him if the Board or a judge in chambers, as the case may be, decided in his favour. On appeal to a judge in chambers in the first place no deposit was required to be made, though filing fees are, of course, payable.
The position was changed by the Income Tax (Amendment No. 2) Act, 1970. Section 18 of that Act, inter alia, amended section 56D by substituting the following subsection for subsection (5):
“(5) No appeal shall lie to the Board unless the person aggrieved by an assessment made upon him by the Commissioner has paid to the Commissioner tax equal to two-thirds of the tax which is in dispute.” (See s. 82(5)).
Section 21 of the Income Tax (Amendment No. 2) Act, 1970, repealed section 68 and substituted for it the following section (now s. 98):
“68. No appeal shall lie under section 57(1)(a) to a judge by a person aggrieved by an assessment made upon him by the...
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