Tax reassessment case: GRA appeals ruling involving Chinese businessman

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The Guyana Revenue Authority (GRA) has filed an appeal with the Court of Appeal against a decision by High Court Judge Fidela Corbin-Lincoln who ruled that the State agency acted unlawfully when it demanded more taxes from Chinese businessman, Shanglin Lin, the sole importer of ‘Prime Diapers’ in Guyana.

Shanglin Lin took the tax authority to court over its reassessment of duties and determination that he owed an extra $5.7M on imported diapers. The businessman imports adult and children’s diapers of the Prime Diapers brand from China.

The businessman complained that he was blocked by the GRA from making electronic filings. This came after GRA sent the importer a letter in January 2020, demanding that he pays $5.7M in duties on several containers of diapers that were imported the previous year but which, because of mistakes, had to be reassessed.

A letter signed by the Deputy Commissioner of Customs, Excise, and Trade Patrick Hyman, said Shanglin Lin had up to two weeks to make the additional payment. When the importer, who had already sold the products, did not make the requested payment, he was blocked from electronically filing his tax declarations.

Before receiving the letter dated January 3, 2020, he was not required by the GRA to submit any additional invoices or other documents regarding the imported items. He was neither informed by the GRA that there was an error, mistake, or other queries regarding the declared value of the imported items or duty or taxes payable.

The businessman was also not informed of the reason or basis for the imposition of the additional duties and taxes or allowed to be heard or given a hearing prior to the decision by the GRA to demand additional duties and taxes. He said that letter of demand was premised on  “anomalies” and listed transactions going back to January 2019 for which duties were already fully assessed and paid.

The letter failed to identify any of the anomalies and also failed to state how the additional duties and taxes were calculated or what legal principles were used to compute same but indicated that the GRA’s Post Clearance Unit could be contacted.

Shanglin Lin had sought a review of GRA’s decision, but his requests were denied.

However, GRA argued that Shanglin Lin was informed that his consignments were being reviewed prior to the January 3, 2020 letter. Additionally, GRA explained that a post-clearance audit was done that showed that the declared values for the diapers and soap powders the businessman imported were below the standard value.

GRA had insisted that its actions were at all times within the scope of the Customs Act. But in an October 6, 2021 ruling, Justice Corbin-Lincoln held that GRA failed to establish any statutory basis for reassessing the importer’s duties. The Judge ruled that there was no statutory basis for the methodology used, which involved value comparisons between Prime Diapers and diapers imported by another company.

In the circumstances, the Judge quashed GRA’s decision demanding the businessman to pay $5,763,755 in duties on the grounds that it is unlawful, unfair, ultra vires, and in breach of the Customs Act Cap 82:01 and subsidiary legislation.

Justice Corbin-Lincoln, therefore, ruled that GRA’s decision to block Shanglin Lin

from uploading documents to its electronic processing system, ASYCUDA, is quashed on the grounds that it is unlawful, unfair, ultra vires, and in breach of the Customs Act Cap 82:01. GRA was ordered to pay costs that are to be assessed.

Grounds of Appeal

Seeking to have the decision of the lower court wholly set aside and/or reversed, GRA has filed a notice of appeal in which it puts forward several grounds on which Justice Corbin-Lincoln committed errors in law and misdirected herself.

It contends that the Justice erred and misdirected herself in law when she ruled that Section 17 of the Customs Act does not authorize GRA to carry out an audit and impose further duty after goods have been entered, cleared, and delivered.

GRA further contends that the trial Judge erred and misdirected herself in law when she ruled that Section 233 of the Customs Act does not empower it, whether due to failure to provide documents or even if documents are provided, to re-assess duty on goods that have been entered and delivered based on documents provided or on some basis so as to determine that duty has been “short levied”.

The tax body argues, too, that the Judge erred and misdirected herself in law when she ruled that it failed to establish the statutory basis upon which it embarked upon a reassessment of duty on the goods which were entered and delivered due to his failure to provide requested documents under Section 233 and Regulation 36 of the Customs Act or to cooperate with the audit and inspection under Regulation 204W.

It further argues that the trial Judge erred in law when she ruled that since the purported reassessment and demand for additional duty was unlawful, the consequential blocking of the businessman from ASYCUD was also unlawful.

And that the Judge erred when she ruled that the statutory basis upon which it was determined that the goods were “short levied” for the purpose of Section 17 (2) of the Customs Act was not established.

The appeal court is yet to set a date for hearing this matter.