Nika Management Company Ltd v Global Accountancy College Ltd

• Jurisdiction: Jamaica
• Judge: SYKES J
• Judgment Date: 01 October 2015
• Neutral Citation: [2015] JMCC COMM 19
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2014CD00136
• Date: 01 October 2015

[2015] JMCC COMM 19

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

COMMERCIAL DIVISION

CLAIM NO. 2014CD00136

Between

Nika Management Company Limited

Claimant

and

Global Accountancy College Limited

Defendant

Nigel Jones and Kashina Moore instructed by Nigel Jones and Company for the claimant

Althea McBean for the defendant

GENERAL CONSUMPTION TAX — WHETHER UNREGISTERED PERSON CAN COLLECT GENERAL CONSUMPTION TAX

IN CHAMBERS

SYKES J

1 Nika Management Company Ltd (“Nika”) owns property that it leased to Global Accountancy College Ltd (“Gobal”). The term began on August 7, 2012. Rent was payable monthly on the first day of each month. Between August 2012 and October 2014, Global paid its monthly rental which included an amount for a general consumption tax know as GCT. This tax is based on the value of the rent.

2 It has now turned out that Nika was not registered under the General Consumption Tax Act (“GCTA”). Upon being armed with this information, Global decided it would not pay any more rent and demanded a refund of all the sums it had paid over as taxes. Global went further to say the amount collected as GCT should be applied to rent and therefore, Global need not pay over any more actual cash until it had occupied the property for an period of time equivalent to amount collected as GCT.

3 Nika responded by giving notice to Global and filed a fixed date claim form in which it sought (a) an order for recovery of possession; (b) outstanding rent of US$16,070.01; (c) a declaration that Global is not entitled to set off rental payments against the GCT payments payable; (d) mesne profits at US$5,356.67 per month and (e) interest on the amount owed at a commercial lending rate.

4 At the time of the hearing, Global had already vacated the property so the first order sought is no longer before the court. There is no doubt that Global refused to pay the rent and to that extent the amount claimed is actually owed. There is no doubt that Global occupied the property after it received notice to quit and therefore mesne profit is due and payable to Nika in the amount claimed. It is also the case that since Global declined to pay the rent that what it did was force Nika to become an involuntary lender and so the rent owed attracts interest at a commercial rate. Nika submitted evidence of the interest during the relevant period and interest is therefore awarded on the outstanding rent at the rate claimed. This applies to the rent and the mesne profit.

5 The court has decided that Global is entitled to set off rental payments against the GCT payments collected by Nika. This amounts collected by Nika attracts interest but at the rate under the Law Reform (Miscellaneous Provisions) Act because interest at the commercial rate was not claimed by Global. The has decided that Nika was not entitled to collect GCT from Global because it was an unregistered taxpayer and on that basis the amount of money collected is refundable.

The submissions

6 Nika contends that even though it was not registered it was liable to pay GCT from the time it started leasing the premises to Global because the relevant statute imposes the tax regardless of whether one is registered or not and the liability to pay arises not upon registration but on offering any goods or services that are taxable. The court has to decide who is correct.

7 Global's response is a one liner: “You are not registered under the GCTA and therefore you have no lawful authority to be collecting GCT.” The court agrees with Miss McBean, counsel for Global. These are the reasons.

GCT

8 In 1991 the GCTA became law in Jamaica. GCT is imposed on the supply in Jamaica of goods and services by a registered taxpayer once that taxpayer is carrying on a taxable activity (section 3 (1)). The amount of the tax is based on the value of the goods and services. The tax is a percentage of the total value of the transaction. From time to time the percentage of the transaction that comprises the tax is varied. By taxable activity it is meant that the activity is being carried on in the form of a business, trade, profession, vocation, association or club and the activity is carried on habitually or continually (section 2 (1)). This definition was amended in 2014 but nothing turns on the amendment.

9 In simple terms the tax worked like this: the supplier charges the purchaser the stated percentage of the value of the transaction. When that percentage is collected it is paid over to the government. In some circumstances, the consumer of the goods or services could claim a refund. In effect, the supplier is the tax collector for the government which explains why he needs to be registered.

The Statute

10 The court will examine the statute in order to determine what was its object. The court bears in mind that a statute may have many purposes. In deciding what the objective of the statute is the starting point must be the actual words used by the legislature and not some extrinsic material such as Ministry papers, Ministerial statements and the like. The reason is that the legislative process does not necessarily go as smoothly as even the minister would like. It has been said that what emerges from Parliament is the state the statute should have been in when it went in and what goes in is the state in which it should have come out.

11 The court is aware of Lord Nicholls' enthusiastic endorsement of the use of extrinsic material in Regina v. Secretary of State for the Environment, Transport and the Regions, ex parte. Spath Holme Ltd in [2001] 2 AC 349. This court's caution about the too ready use of these materials is that must not be forgotten that it is the legislature that makes laws and not the executive. The executive proposes law. The executive has the support the draftsman who crafts the laws to meet the policy enunciated by the executive and at that time the statute may well be a coherent whole with all pieces fitting together. It is well known that the Bill may be subject to special committees who hear submissions from interest groups and the committee may make recommendations for the Bill to be amended. If the Bill comes out of the committee, when it goes before the whole legislature it may be subject to even further changes and so what was a coherent document now becomes a document resembling a patchwork.

12 If this patchwork is passed, that is...