The Caribbean Court of Justice (CCJ) on Thursday issued its reasoning for allowing the appeal of James Ramsahoye v Guyana Revenue Authority (GRA).
In the case, the court had ordered that monies belonging to Ramsahoye, which the GRA had deprived him of, be paid to him.
Ramsahoye was awarded damages of approximately $78 million against his former employer Linden Mining Enterprise Ltd (Linmine) for loss of salary for 41 months, pension for the years 1972 to 1998, and interest by the Guyana Court of Appeal.
In 2004, GRA wrote to Linmine demanding that company pay them over $45 million for income tax allegedly owed by Ramsahoye for the years 1990 – 98 along with the the sum awarded by the Court of Appeal representing Ramsahoye’s salary for 41 months in accordance with Sections 93 and 102 of the Income Tax Act.
Linmine then paid the sum to GRA by deducting it from the damages owed to Ramsahoye without informing him and Ramsahoye only found out about it when he sought to enforce the judgment against Linmine.
He then moved to the High Court against GRA where an order was issued quashing the assessment of tax and it was held that the damages awarded were not taxable.
However, GRA then moved to the Court of Appeal which upheld the quashing order in its entirety but subsequently in its formal order, stated that it allowed the appeal in part – presumably on the basis that the court had decided that damages constituted income under Section 5(b) of the Income Tax Act.
The judges who heard the appeal at the CCJ were Justice Adrian Saunders, President of the Court and Justices Wit, Anderson, Barrow, and Burgess. Ramsahoye was represented by C.V. Satram, R. Satram and R. Motilal while GRA was represented by J Stuart-Adonis, H Yasin-Nandlall, M. Halley, F. Hamilton, O. Gordon, and J. Persaud.
“Justice Barrow delivered the reasons of the majority of the Court. The Judge noted that GRA’s Counsel acknowledged that the violation of the dispute resolution procedures under the Act nullified the entire assessment, both in respect of the years 1990-98 and Ramsahoye’s loss of earnings,” CCJ said in the press release.
The CCJ noted that in the specific case, the Court of Appeal’s finding that damages were taxable in principle had no effect on the result, which was the upholding of the quashing order and therefore found that the order of the Court of Appeal that the appeal was allowed in part was wrong.
Delivering his judgment, Justice Burgess found that the damages being compensatory in nature were income within the meaning of s5 (b) of the Act, however, he stated that the damages could not be said to be derived ‘from employment’ as the Court of Appeal awarded Ramsahoye income until he reached age 65, and the damages were not in respect of any services rendered but were awarded for his wrongful dismissal.
Further, Justice Burgess found that Ramsahoye could enforce the return of the sum unlawfully deducted by the GRA, as a taxing authority that erroneously taxes a person could be ordered to repay the money taxed plus interest as a matter of common law.
Justice Burgess therefore decided that the principle of ‘unjust enrichment’ applied as the GRA was enriched, the enrichment was at the expense of Ramsahoye, it was unjust and the GRA’s defence that it was acting according to the powers granted to it under the Act was not a defence.
