Mr Anil Nandlall, former Attorney General, berates the government for not settling its environmental tax case with SM Jaleel and its subsidiary Guyana Beverage Inc, a decision on which was handed down by the CCJ on May 9. Had Mr Nandlall disclosed that the root of the problem was the PPP’s failure to withdraw the 1997 tax which became unlawful on the coming into force of the Revised Treaty of Chagauramas in 2001, his letter would have had more credibility. In fact, the PPP recklessly ignored twelve warnings from the Council of Trade and Economic Development (COTED) of Caricom between May 22, 2001 and March 30, 2012, that the tax was a violation of the Revised Treaty of Chagauramas (RTC). Mr Nandlall places the blame on APNU and the AFC for their failure to support an amendment in 2013 but does not state why the PPP/C did not use its majority prior to 2011 to amend the legislation, or why it did not simply stop collecting the tax after it lost its parliamentary majority, as the CCJ pointed out.
It is also important to recall that Mr Nandlall himself argued the similar case brought by RUDISA against the government but failed to raise important points of law, one of which the CCJ indicated would have been an attractive proposition. The CCJ ruled in its entirety against Guyana in RUDISA which was awarded judgment for the full sum of US$6,047,244 they claimed. In the SM Jaleel case, the claim against Guyana was for $2,277 million for the period January 2006 to August 7, 2015. The CCJ ruled, however, that only $1,178 million collected between May 7, 2011 and August 7, 2015 must be refunded. That works out at approximately 52% and after tax adjustment to approximately $700 million.
I believe that Mr Basil Williams was right in taking the case to the CCJ and that Guyana has reason to consider that the ruling was particularly harsh against it. In fact, had the CCJ not rejected two applications by Guyana for reasons that are highly debatable, Guyana would have fared much better. The applications were to produce expert evidence from Dr Maurice Odle and me, and the second a request for documents.
When the CCJ adjudicates on the RTC, it acts under its original jurisdiction where both facts and law are at issue. This contrasts with non-RTC cases in which it acts under its appellate jurisdiction in which only issues of law are adjudicated on. While the CCJ has considerable discretionary powers, these need to be applied with great care.
There was nothing to lose and much to gain by the presentation and examination of the relevant facts.
Guyana’s defence rested on two limbs, the first passing on i.e., that SM Jaleel/Guyana Beverages Inc passed on the tax to consumers and that to allow them to collect from Guyana would have constituted unjust enrichment; and secondly, what lawyers call laches, which is another term for delay in bringing a claim.
Guyana had what we considered quite compelling evidence that tax was included in cost of sales as disclosed by the financial statements of Guyana Beverages Inc, and that from the very beginning the company had placed an advertisement in Guyana’s national newspapers advising the public that it would be increasing the price of the product by the amount of the environment tax of $10 per bottle. Yet, the court ruled that for Guyana to have succeeded in its passing-on defence, it had to produce evidence that the tax was separately itemised on the invoice. The CCJ was clearly unaware that other than in the case of Value Added Tax, it is highly unusual that indirect taxes are separately itemised on an invoice. We would also have led accounting evidence to support Guyana’s case.
On the question of laches, the CCJ recognised claimants have a duty to be reasonably diligent in enforcing their rights but at the same time ignored the fact that SM Jaleel/Guyana Beverages Inc waited more than a year and ten months after the RUDISA decision before it brought the current action. It is instructive to note that SM Jaleel/Guyana Beverages Inc were aware that the Customs Act requires a claim for a refund to be made within six months. It seems to me that even if the court considered that five years is a reasonable period of limitation, it should have shown its disfavour at the unacceptable delay by SM Jaleel/Guyana Beverages Inc in bringing their claim.
I would not be surprised if SM Jaleel/Guyana Beverages Inc which, even after the May 2014 RUDISA decision was available to them, failed to disclose the environmental tax paid as a contingent asset in its subsequent financial statements, and took a year and ten months to bring its claim, considers the decision beyond their expectation.