Finance Minister supports fight against Banks DIH

$28B lawsuit

Finance Minister Winston Jordan will also be supporting all efforts against beverage giant Banks DIH Limited, which recently slapped the Guyana Revenue Authority (GRA) with a multibillion-dollar lawsuit, claiming overpayment in taxes and calling for equitable treatment, as was given to its competitor, the Demerara Distillers Limited (DDL).

“We will litigate it to its depth,” the Minister stated.

The Finance Minister declined to comment further on this striking development, noting that the matter is currently engaging the attention of the court.

Just a few days ago, Attorney General Basil Williams declared that Banks DIH will be fighting a lost cause against the country’s tax authority, guaranteed that all efforts will be exhausted to ensure not a dime comes out of the public purse to refund the beverage giant, which has filed a $28 billion lawsuit against the GRA to be given the same preferential treatment as DDL.

DDL, last year, benefited from a whopping $3.8 billion tax write-off, following over 15 years of litigation with the GRA over its tax payments.

In 2002, a legal challenge was launched by DDL against the GRA over its assessment by the Commissioner General of consumption taxes owed by that company in a sum exceeding $1 billion, for the period January 2001 to September 2002.

It was eventually quashed by the High Court on February 1, 2005. The GRA appealed that decision in the Court of Appeal.

On July 31, 2008, the Court of Appeal dismissed this appeal on the ground that the Commissioner General had used a wrong formula for the calculation of the consumption taxes.

The Court prescribed a formula to be used.

In 2009, the Commissioner General, utilising the court-recommended formula, assessed DDL’s consumption tax liabilities for the period 2001-2007 (since after 2007 Consumption Tax was abolished with the introduction of Value Added Tax). The newly assessed liability of DDL for that period was some $5.3 billion.

Again, DDL filed legal proceedings challenging this assessment.

According to the records, the GRA then retained an external Senior Counsel and was steadfastly defending this challenge when the A Partnership for National Unity/Alliance For Change (APNU/AFC) coalition assumed office.

Instead of continuing to defend Government’s case against DDL, the beverage company was granted a $3.8 billion tax write-off, having only to pay $1.5 billion.

Therefore, after about 15 years of litigation, with DDL having the use of several billion dollars of State funds, interest-free, the APNU/AFC Government settled for $1.5 billion.

Banks DIH, in December 2016, filed legal proceedings against the Attorney General and the GRA, claiming over $28 billion in repayments in light of the $3.8 billion tax write-off granted to its competitor, DDL.

DIH paid some $12.8 billion in taxes over the period 2001 to 2006. But in light of the DDL tax write-off last year, the beverage giant calculated that it should have only paid some $3 billion.

The company argued that the Government would be “unjustly enriched” if it retained approximately $9 billion (the difference between the paid amount in taxes and the net figure Banks DIH estimated it should have paid).

In this regard, Banks DIH claims that it is entitled to some $9 billion, plus 10 per cent interest compounded over the period 2001 to 2006, resulting in a total of some $28 billion after taking into account the settlement figure payable by DDL of $1.5 billion.

The GRA, in a statement on Wednesday, said it will respect the court’s jurisdiction by not litigating issues of law in the public domain.