National Commercial Bank Jamaica Ltd and Others v Commissioner General Tax Administration of Jamaica
| Jurisdiction | Jamaica |
| Judge | Rattray, J. |
| Judgment Date | 23 March 2015 |
| Court | Supreme Court (Jamaica) |
| Docket Number | REVENUE COURT APPEAL NO. 4 OF 2012 |
| Date | 23 March 2015 |
[2015] JMRC 1
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE REVENUE COURT
Cor: Rattray, J.
REVENUE COURT APPEAL NO. 4 OF 2012
and
and
Gavin Goffe & Shani Nembhard instructed by Myers Fletcher & Gordon for Appellants
Cecelia Chapman Daley & Sophia Preston for Respondent
Janelle Mushette Leiba representative of the Appellants present
Suzette Harriot Rogers representative for the Respondent present
General Consumption Tax — GCT paid within prescribed time — Returns filed a day late — Penalty imposed — Whether liability appropriate — Meaning of “Due and Payable”— Appropriate procedure when returns filed late — sections 33, 54(2) General Consumption Tax Act
The Appellants, National Commercial Bank Jamaica Limited (“NCB”), NCB Insurance Company Limited (“NCB Insurance”) and Data-Cap Processing Limited (“Data-Cap”) are companies incorporated under the Companies Act of Jamaica, sharing registered offices at the Atrium, 32 Trafalgar Road, Kingston 5. They appeal against the decision of the Commissioner General, Tax Administration of Jamaica, which sought to impose penalties and interest for the late filing of General Consumption Tax (“GCT”) returns. The penalties, inclusive of interest, applied to each of the Appellants were:-
NCB — $14,530,101.50
NCB Insurance — $ 1,191,837.71
Data-Cap — $99,515.00
These sums represent fifteen percent (15%) of the taxes which the Respondent alleges was “due and payable” for the taxable period December 1, 2011 to December 31,2011.
On January 31,2012, the last day of the prescribed period set out by the General Consumption Tax Act (“the GCT Act”) for the payment of such taxes, the Appellants remitted their GCT for the said taxable period. They however neglected to furnish the requisite GCT returns, which returns were submitted the following day, February 1, 2012, one day outside the prescribed period.
By letter dated February 20, 2012 addressed to the 1 st Appellant NCB captioned ‘Payment Reminder’, the Debt Management Officer from Tax Administration Jamaica pointed out that the company had failed to make payment on account of its GCT liability and also quantified the sums to be paid as penalty and interest. Two similar letters of the same date were also sent to the other two Appellants, NCB Insurance and Data-Cap, but their correspondence did not bear the aforementioned caption. Those letters reminded the Appellants that interest also accrued at the rate of 2.5%. It is accepted by both sides that these letters inaccurately alleged that the Appellants had failed to make payments of GCT for the period ending December, 2011.
By letters dated February 29, 2012, the Appellants objected to the demands made in the payment reminders. The Respondent in turn in their letters dated April 23, 2012, advised the Appellants of their obligation under Section 33(1) of the GCT Act to furnish a return and to pay to the Commissioner, within the prescribed period, the amount of GCT, if any, for the taxable period to which the return relates. That section states:-
‘S. 33(1) A registered taxpayer shall, within such period as may be prescribed, whether or not he makes a taxable supply during any taxable period-
(a) furnish to the Commissioner a return in a form prescribed or approved by the Commissioner containing such particulars as may be prescribed; and
(b) pay to the Commissioner the amount of tax, if any, payable by that registered taxpayer in respect of the taxable period to which the return relates.’
The letters also stated that the penalty was imposed by virtue of Section 54(2)(b) of the GCT Act, which reads:-
‘S.54 (2) Every person who fails to make a return under section 33 shall
be liable —
(a) in the case of —
(i) an individual, to a penalty of one thousand dollars, or
(ii) a body corporate, to a penalty of two thousand dollars, or
(b) to a penalty of an amount equal to fifteen per cent of the tax which was due and payable in respect of the taxable period to which the return relates,
whichever is the greater.’
The Appellants were advised to appeal to the Commissioner Taxpayer Appeals, which they did by letters dated April 27, 2012. After careful consideration however, the Acting Commissioner, under cover of letter dated June 26, 2012, declined to hear the appeals as the matters in dispute were outside its jurisdiction, which is limited to disputes as to assessment of taxes only and not disputes regarding the imposition of penalties. In their response, the Appellants by letter dated July 24, 2012 requested that they be provided with either a notice of assessment to facilitate the appeal or notice of decision to facilitate the filing of an appeal with the Revenue Court. By letter dated July 26, 2012, the Commissioner General Taxpayer Appeals reiterated its advice that any appeal would have to be made to the Revenue Court.
The Appellants appeal to this Court on the grounds that:-
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i. The Appellants are not liable for penalties or interest under section 54(2) of the General Consumption Tax Act as the Respondent has not made an assessment in writing of the tax payable by the Appellants as required by section 38 of the Act.
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ii. There is no statutory basis for the Respondent to issue a Payment Reminder and consequently such Payment Reminders are null and void.
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iii. The Appellants did not fail to make a return under section 33 of the General Consumption Tax, but instead were one day late in the filing of their returns for which there is no prescribed penalty under the Act.
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iv. If the Appellants are liable under section 54(2) of the Act for failing to make a return, the maximum penalty payable is $2,000.00.
Under the first ground of appeal, the Appellants contend that they are not liable for penalties or interest under section 54(2) of the GCT Act, as the Respondent has not made an assessment in writing of the tax payable by the Appellants as required by section 38 of the said Act. That section states:-
‘S. 38(1) Where a registered taxpayer—
(a) fails to furnish a return as required by this Act;
(b) furnishes a return which appears to the Commissioner of Inland Revenue to be incomplete or incorrect, that Commissioner shall refer the matter to the Commissioner of Taxpayer Audit and Assessment who shall make an assessment in writing of the tax payable by that registered taxpayer.’
Counsel for the Appellants, Mr. Goffe argued that the GCT Act provides its own mechanism, which must be followed where a return is not filed and that procedure is that the Commissioner ‘shall refer the matter to the Commissioner of Taxpayer Audit and Assessment who shall make an assessment in writing of the tax payable by that registered taxpayer.’ Mr. Goffe submitted that the language of the said Act is mandatory and that the Respondent is obliged to raise an assessment before legal liability for the tax can arise. He relied on the case of Berry v Farrow & Another [1914] KB 632 in support of that submission. In that case, the Court held that under the Income Tax Act, 1842 and the Taxes Management Act, 1880, Notice of Additional Assessment and a demand for payment must be given to the person sought to be charged.
He further submitted that the raising of an assessment is not only a prerequisite for the legal liability to pay the tax, but also for any interest and penalties that may be imposed by the Act. In that regard, Counsel relied on section 55 of the GCT Act, which provides that ‘Any penalty… payable under this Act may be added to any tax due and payable and may be recovered as if it were tax.’ He also relied on section 48 of the Act, the effect of which is to apply the provisions of the Tax Collections Act with respect to payment, collection and recovery of tax and the enforcement of such payment, to General Consumption Tax. Section 23 of the Tax Collection Act states:-
‘S.23 When no return, in respect of the duties or taxes, or any of them, imposed by any enactment of this Island, as shall be by such enactment required, shall be made to the Collector of Taxes, or other officer as aforesaid, such officer shall assess the person neglecting to make such return to the best of his judgment, and according to such information as he may be able to obtain, and shall add to such duties or taxes the penalty specified in that enactment.’
In his submissions, Counsel for the Appellants strenuously urged the Court to find that the above cited section puts it beyond doubt that the imposition of any penalty for the failure to file a return must be made by way of an assessment and not by letter or by a payment reminder.
The essence of the Appellants' complaint under Ground 1 of Appeal is that they ought not to be found liable for any penalty under the GCT Act as the Commissioner has not raised any assessment as required by section 38. Without such an assessment in the circumstances of this case, no penalty can arise. The Appellants contend that there are four(4) relevant provisions of the said Act to be considered :-
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(a) under section 33, the two fold obligations that the taxpayer has to satisfy, that is, to furnish a return, and to pay the tax, within the prescribed period;
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(b) under section 38, the procedure that the Commissioner of Inland Revenue is to utilise in the event that the taxpayer fails to adhere to the provisions of that section, which is to refer the matter to the Commissioner of Taxpayer Audit and Assessment for an assessment to be raised of the tax payable by the taxpayer;
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