Real Resorts Ltd v Commissioner of General Consumption Tax

• Jurisdiction: Jamaica
• Judge: RATTRAY. P.: , BINGHAM, .A.: , Panton. J.A. (Ag.):
• Judgment Date: 11 October 1999
• Neutral Citation: JM 1999 CA 58
• Judgment citation (vLex): [1999] 10 JJC 1101
• Court: Court of Appeal (Jamaica)
• Date: 11 October 1999

IN THE COURT OF APPEAL

BEFORE:

THE HON. MR. JUSTICE RATTRAY, P THE HON. MR. JUSTICE BINGHAM., J.A THE HON. MR. JUSTICE PANTON, J.A. (Ag.)

BETWEEN

REAL RESORTS LIMITED

APPELLANT

AND

THE COMMISSIONER OF GENERAL CONSUMPTION TAX

RESPONDENT

Angela C. Hudson-Phillips. Q.C. and Richard Evans , instructed by Patterson, Phillipson & Graham, for the appellant

Barbara Lee and Frank Williams , instructed by The Revenue Board, for the respondent

REVENUE LAW - Tax refund - Claim - Memorandum of understanding - General Consumption Tax Act

RATTRAY. P.:

1 By a Memorandum of Understanding dated 6th February, 1995, the appellant Real Resorts Limited agreed, inter alia, with Beaches Management Limited (hereinafter referred to as "Beaches") and Gorstew Limited (hereinafter referred to as "Gorstew") that a hotel planned to be constructed on lands at Negril by the appellant would be completed and equipment leased from the appellant and operated by Beaches, a wholly-owned subsidiary of Gorstew under the name Beaches Negril Hotel. Annexed to the Memorandum of Understanding was a form of lease of the hotel and a form of guarantee. These draft documents were to be executed and entered into when construction of the hotel was completed.

2 In an addendum to the Memorandum of Understanding dated 5th June, 1996, it was further agreed that Beaches would install a water supply system for the hotel at its own cost the system to remain the property of Beaches.

3 Professional fees for the services of architects, etc., incurred in construction of the hotel were paid by the appellant and in respect of these payments General Consumption Tax was also paid.

4 By letter dated 4th July, 1995, the appellant claimed from the Commissioner of General Consumption Tax as refund of input tax the General Consumption Tax paid by the appellant in respect of the architectural fees aforementioned. The application for this refund was refused by the Commissioner by letter dated 23rd November, 1995. Following submissions by Messrs. Pryce Waterhouse on behalf of the appellant to the respondent a formal decision by the respondent upholding the refusal was given by letter dated 20th February, 1997.

5 The appellant appealed the decision of the respondent to the Revenue Court by Notice dated 18th March, 1997. On the hearing of a summons for extension of time within which to file a statement of case, which was taken out by the respondent, by virtue of agreement between the parties the Judge of the Revenue Court, Orr J., treated the summons as a hearing of the substantive appeal and after submissions of Counsel for the parties on the 23rd and 24th October, 1997, reserved his judgment which he delivered on the 18th December, 1998, in favour of the respondents. It is this decision which comes before us now on appeal.

6 Certain facts have been agreed by the parties as follows:

• "1. That construction of the hotel was not completed during the taxable periods subject of this appeal and that no lease had commenced during those periods.

• 2. That the appellant had, prior to the taxable periods subject of this appeal, entered into a Memorandum of Understanding dated February 5, 1995, copy of which is handed up to the court.

• 3. That the appellant procured that the hotel be constructed for it by an independent contractor.

• 4. That the $800,000 bi-monthly in respect of which the appellant had returned output tax does not relate to rental income in respect of the...