6 Weeks ago, Importer Jack Charles made the news when he challenged local rice producers and accused them of gouging the general public with high the high price of rice. Well tonight, Charles, is back in the news tonight after he challenged the government and won a victory against the Sales Tax Department.
His grievance with the GST office goes back to February 2013 when the Sales Tax Commissioner sent Xtra House, a letter saying that he owed 5 years of arrears - a total of 1.1 million dollars.
Of course, Charles disputed that assessment as arbitrary, but due to Sections 42 and 45 of the law, to get an appeal or review of that decision, he would have had to pay 50% of the figure assessed - a cool half a million dollars - or to be precise, just over 550 thousand dollars. Charles's position at the time was that he couldn't come up with that money within 15 days.
So, he filed a lawsuit in the Supreme Court in which he claimed that the way the GST Act is designed, it violates his constitutional right to access the Supreme Court or the GST tribunal - because he'd first have to pay half of the taxes upfront.
His case was argued before Justice Michelle Arana and his attorney, Godfrey Smith, presented his grounds for the challenge to the GST law. After listening to the case, Justice Michelle Arana delivered her ruling today in which she said, quote, "I have found that the Section 45 of the Sales Tax Act is unconstitutional…" End Quote. But because of the Government's important right to collect taxes to run the country, she decided to amend the law.
In that amendment, the Sales Tax Commissioner now has the discretion of deciding whether or not to waive that requirement for tax payers to front 50% of the tax assessment for an appeal to be heard. Today, one of his attorneys, Leslie Mendez, explained to us that this seemingly small change is a landmark victory with important implications:
Leslie Mendez - Attorney for Jitendra Chawla
"Our position was that those sections, the effect of those sections together was oppressive and was rather draconian to tax payers. And it also limited or rather restricted the right of individuals to access the courts. There were also other grounds on which we challenge them. But the court agreed with us when it comes to the right of access to the court. The court agreed with us on that point and the court did not strike down the sections. What it did was to bring it into conformity with the constitution as Justice Arana saw fit. So that the court read into the sections a discretion, it imposed or empowered the commissioner to have a discretion as to whether it will demand 50% of the taxes that he has assessed from the tax payer."
Daniel Ortiz
"How would you respond to the position that, yes indeed the court has rules in your client's favour that the tax law was draconian and it was oppressive. But the fixed that the judge did was so conservative that its effect is circumvented?"
Leslie Mendez - Attorney for Jitendra Chawla
"I would say that what the court did was to balance the importance of the act and the importance of the government of Belize being able to collect revenue expeditiously, against the right of Mr. Chawla. Now that the commissioner has a discretion, that discretion is also subject to review. So that if the commissioner exercises that discretion unreasonably, that discretion is also subject to review. So that if the commissioner exercises that discretion unreasonably - you can also review that exercise of exercise of the discretion. So I would not agree that it was so conservative that Mr. Chawla feels as if the courts have not worked in his favour. At the end of the day now, there is no mandatory obligation for him to pay the 50% and on that account I believe that it was a victory for him."
So, will Jack Charles have to pay that 1 million plus dollars? Well, the Sales Tax Commissioner will decide whether or not he should waive the 50% requirement to qualify for a review of the arrears which the GST Department says he owes. If he does waive it, then Chawla's case will be reviewed. If he doesn't, then Chawla can challenge that decision in court.
There is also another outcome where Government, which was represented by Deputy Solicitor General Nigel Hawke, can appeal this Supreme Court Decision.
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