Guyana Revenue Authority v Demerara Distillers Ltd
| Jurisdiction | Guyana |
| Judge | Chang, C.J. |
| Judgment Date | 31 July 2009 |
| Neutral Citation | GY 2009 CA 8 |
| Docket Number | Civil Appeal No. 20 of 2005 |
| Court | Court of Appeal (Guyana) |
| Date | 31 July 2009 |
Court of Appeal
Singh, C, (Ag.); Chang, C.J.; Ramlall, A.J.
Civil Appeal No. 20 of 2005
Mr. Ashton Chase, S.C for the appellant.
Mr. Rex Mc Kay, S.C for the respondent.
Revenue law - Consumption tax — Whether Comptroller wrongly assessed sale price of products.
Administrative law - Certiorari — Prohibition — Whether legitimate expectation arose from a promise made by the President.
Chang, C.J. (AG.): On the 1st February 2005, on an application by the respondents, Demerara Distillers Limited, Writs of Certiorari and Prohibition were issued by Justice Dawn Gregory-Barnes against the appellant, Guyana Revenue Authority. The Writ of Certiorari quashed the decision of the Guyana Revenue Authority.
“to assess and demand from the applicant payment of the sum of $1,072,989,851 (one billion seventy two million nine hundred and eighty nine thousand eight hundred and fifty one dollars) as consumption tax for manufactured alcoholic products for the period January 2001 September 2002 on the grounds that the said assessment was erroneously computed and not assessed in accordance with the provisions of the Consumption Tax Act, Chapter 80:02, is unconstitutional, unlawful, arbitrary, unreasonable, made in bad faith, without or in excess of jurisdiction, is ultra vires, null void and of no legal effect”.
The Writ of Prohibition prohibited the said Guyana Revenue Authority from proceeding with the said assessment and recovery of the said sum on the said grounds.
On the 2nd March 2005, the Guyana Revenue Authority filed a Notice of Appeal to this Court against the decision of Justice Barnes. Several grounds of appeal were set out in the Notice of Appeal and advanced before this Court. However, since it appears to me that the crux of this matter related to the interpretation or construction of section 3 of the Consumption Tax Act, Chapter 89:02, I will confine my judgment essentially to the ground of appeal which relates to the interpretation or construction of Section 3 (i.e. Ground VII). Ground VII of the appellant's grounds of appeal reads:
“The learned trial judge erred in the construction and interpretation of section 3 of the Consumption Tax Act.”
Section 3 of the Consumption Tax Act provides:
“(1) Subject to and in accordance with the provisions of this Act and any regulations made thereunder there shall be raised and collected at such rate as the Minister may determine by order made under Section 4, a consumption tax in respect of any chargeable goods imported into Guyana or manufactured therein, except chargeable goods imported or acquired as material for, and used as such by a registered manufacturer.”
“Chargeable goods” is defined in section 2 of the Act as meaning:
“such goods as may be specified in an order of the Minister made under section 4”.
Thus, the Minister may make orders under Section 4 specifying what goods manufactured in Guyana are chargeable and the rate at which consumption tax is chargeable on such goods.
In the instant case, the respondent is a registered manufacturer of alcoholic products (spiritous liquor) for local consumption which attract consumption tax under a Consumption Tax Order made under section 4 of the Act and at the rate of such tax as specified therein.
Section 3 of the Act prescribes that
“(2) The tax, subject as aforesaid, shall be due and collected in relation to
(a) ……………………………………
(b) chargeable goods manufactured in Guyana at the time of the delivery of the goods from the premises of the registered manufacturer or the appropriation of such goods for consumption in Guyana, whichever is the earlier.
(3) where tax is chargeable on any goods by reference to their value that value shall
(a) ……………….
(i) …………………………
(ii) ……………………
(b) if the goods are manufactured in Guyana, be the price which in the opinion of the Comptroller the goods would fetch on a sale made at the time when the tax in respect of such goods becomes due by a manufacturer selling on the open market in Guyana, if the sale were made in the circumstances specified in the schedule”.
Thus, in relation to chargeable goods which are manufactured in Guyana, consumption tax becomes due either at the time of the appropriation of the goods or at the time of their delivery from the manufacturer s premises for local consumption (whichever is the earlier) (Section 3(2)(b)). But, the time when the consumption tax becomes due is the very or same time when there must be a notional sale of the goods in the open — market with reference to which the Comptroller must form an opinion on the open — market price of the goods for the purpose of assessment of consumption tax. It is therefore crucially important that the issue as to when consumption tax becomes due be determined for the purpose of determining its chargeable value for consumption taxation.
In the instant case, in resolving this question, the trial judge stated:
“Although the parties agree that the appropriation for local consumption is the earlier in the applicant's case, they differ on when such appropriation takes place whether in the company Customs Bond or in its storage area. That difference seems to bear on the value on which tax is assessed”.
Later in her judgment, she made the following finding:
“In my judgment, the goods are appropriated for local consumption at the point of removal from the customs bond. This is the point at which the tax becomes due and with reference to which the value of the goods is assessed”.
It is important to note that section 3(2)(b) focuses not on the place at which there is appropriation or delivery but the time when there is appropriation or delivery. Since what is being appropriated or delivered is not the appropriation or delivery of a single or individual item or unit of alcoholic product but a bulk quantity of alcoholic products for local consumption, appropriation or delivery must be viewed not as an act but rather an activity or process. Since an act is instantaneous while an activity or process is continuous, it does appear that appropriation or delivery takes place over an indefinite period of time during which alcoholic products are being set aside or apart or delivered for local consumption by the manufacturer. In my view, it commences when the first item of alcoholic product is set aside or apart or delivered for local consumption and ends when the last item is set aside or apart or delivered for local consumption. Thus, in my view, it does not really matter where the activity or process of appropriation or delivery takes place. What matters is the time during which such activity or process takes place.
Section 3(2)(b) speaks of “at the time of appropriation” or “at the time of delivery” not “at the point in time” of appropriation (or delivery) and there is no warrant or justification for substituting the words “at the point in time” for the words “at the time”. Indeed, it would not have been sensible or pragmatic for Parliament to have used such words in section 3(2)(b) since, within the context of section 3(2)(b), “appropriation” (or delivery) is an activity or process which is continuous and not an act which is instantaneous.
Therefore, whether one takes the view that “appropriation” or “delivery” for local consumption takes place at the Company Customs Bond or in the storage area, to which the products are taken for sale to the public from the Company Customs Bond, is of no materiality. What is of materiality is when or during which time the products are appropriated or delivered for local consumption since it is that period of time which has statutory relevance to the determination by the Comptroller of the open market price of the products under section 3(3)(b).
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