Banks DIH Limited, a leading manufacturing company in Guyana, has filed a lawsuit against the Guyana Revenue Authority (GRA) and the government, seeking a $28 billion tax refund for the period 2001 to 2006. The company argues that it is entitled to the refund under the Constitution, based on the principle of equal treatment, after a similar tax write-off was granted to its competitor, Demerara Distillers Limited (DDL), by the GRA in 2016.
The lawsuit, which was filed in December 2016, stems from a long-standing dispute between DDL and GRA over the calculation and assessment of consumption tax, which was replaced by excise tax in 2007. DDL had challenged the GRA’s methodology in the High Court in 2002, and won the case in 2005. The GRA appealed the decision, but lost the appeal in 2008. However, instead of accepting the ruling, the GRA issued a new claim against DDL in 2009, amounting to $5.3 billion.
DDL contested the claim, and the matter remained unresolved until 2016, when the GRA and DDL reached an amicable settlement, with the consent of the government. According to the settlement, DDL agreed to pay $1.5 billion to the GRA, in exchange for the withdrawal of all claims and the closure of all legal proceedings. The settlement also stipulated that DDL would not be liable for any interest, penalties, or charges on the amount paid.
A constitutional claim
Banks DIH, which operates in the same sector as DDL, claims that it paid $12.8 billion in consumption tax for the period 2001 to 2006, based on the same methodology that the GRA used for DDL. The company says that it paid the tax “under a mistake of law” and that it only became aware of the mistake when the terms of the settlement between DDL and GRA became public. The company says that the settlement revealed that DDL paid only $3.7 billion in consumption tax for the same period, which means that Banks DIH overpaid by $9 billion.
Banks DIH says that it is entitled to a refund of the overpaid amount, plus interest of 10% compounded over the period, which amounts to $28.4 billion. The company invokes Article 149D of the Constitution, which guarantees equal protection and benefit of the law to all persons. The company says that the GRA violated this article by treating DDL more favourably than Banks DIH, and that the government was complicit in this violation by consenting to the settlement. The company says that the GRA and the government would be “unjustly enriched” if they were to retain the overpaid amount.
A pending decision
The lawsuit is still pending in the High Court, and no date has been set for the hearing. The GRA and the government have not yet filed their defence or response to the lawsuit. The lawsuit has raised several legal and policy issues, such as the interpretation and application of the Constitution, the authority and discretion of the GRA, the role and responsibility of the government, and the implications and consequences of the settlement.
The lawsuit has also sparked a public debate and criticism, especially from the opposition parties and civil society groups, who have questioned the legality and morality of the settlement, and the impact and cost of the lawsuit. They have accused the government of being negligent and irresponsible in agreeing to the settlement, and of exposing the country to a huge financial liability and risk. They have also called for more transparency and accountability in the management and collection of taxes, and for more fairness and justice in the treatment of taxpayers.