British American Insurance Company Ltd Appellant v The Attorney-General of Antigua and Barbuda Respondent [ECSC]

JurisdictionAntigua and Barbuda
JudgeBYRON, C.J.,GEORGES J.A., [AG.],Chief Justice,Sir Dennis Byron,Brian Alleyne, SC,Justice of Appeal [Ag.],Ephraim Georges
Judgment Date18 June 2003
Judgment citation (vLex)[2003] ECSC J0618-1
CourtCourt of Appeal (Antigua and Barbuda)
Docket NumberCIVIL APPEAL NO.20 OF 2002
Date18 June 2003
[2003] ECSC J0618-1

IN THE COURT OF APPEAL

Before:

His Lordship, The Hon. Sir Dennis Byron Chief Justice

His Lordship, the Hon. Mr. Ephraim Georges Justice of Appeal [Ag.]

His Lordship, The Hon. Mr. Brian Alleyne, SC Justice of Appeal [Ag.]

CIVIL APPEAL NO.20 OF 2002

Between:
British American Insurance Company Limited
Appellant
and
The Attorney-General of Antigua and Barbuda
Respondent
Appearances:

Mr. Justin Simon for the Appellant

Mr. Anthony Astaphan, SC; Mr. John Fuller with him for the respondent

BYRON, C.J.
1

This case was commenced to contest the assessment by the Commissioner of Inland Revenue that British American was liable to pay $1,067,166.00 as withholding tax for the period 1995 to 2001 pursuant to section 39(1) of the Income Tax Act Cap 212. Two actions were commenced and consolidated.

2

In one, the decision was challenged as being in breach of the proper interpretation of section 39. The section provides for the withholding tax to be paid where any person pays to another person not resident in Antigua and Barbuda mortgage or debenture, interest or rent, annuity or other annual payment which the payor is entitled to deduct under section 10 of the Act in arriving at its chargeable income. The learned trial Judge concluded on the facts that, since British American was incorporated in the Bahamas and registered in Antigua as a foreign company doing business, the Bahamian company and the Antiguan branch were one and the same person. Thus the amounts paid from Antigua to Bahamas on which the assessment was based were not paid to "another person" as the payee was the same person as the payor. He accordingly concluded that the assessment was erroneous and made appropriate orders quashing liability to pay the assessment. The State did not appeal against the decision.

3

In the other case declarations were sought to establish that amendments enacted in 2000 to section 62 of the Income Tax Act Cap 212contravened the Constitution by depriving the citizen of the right to protection of property and to protection of the law as guaranteed under and by sections 3, 9 and 15 of the Constitution. The provisions which were challenged sought to compel the payment of the assessment before any objection could be determined. The learned trial Judge concluded that the section was constitutionally unchallengeable and dismissed the application. This decision has been appealed against. Both counsel submitted that the matter should not be treated as hypothetical as the matter was being treated as a test case as there were many other applications seeking similar relief.

The Appellant's Complaint
4

The legislative scheme for disputing assessments under the Income Tax Act Cap 212, before the amendment, was set out in provisions of sections 56 to 62. These provided that a taxpayer who was dissatisfied with any assessment could apply to the Commissioner to review the assessment. If the review did not satisfy the taxpayer he could appeal from the commissioner to the Appeal Board, and then to a Judge of the High Court whose decision would be final with power for the Judge to state a case to the Court of Appeal and provided for the Chief Justice to prescribe Rules of procedure governing such appeals. Section 62(2) had originally provided that the collection of tax shall remain in abeyance until the objection or appeal is determined, provided that the Commissioner may enforce payment of any portion of the tax that is not in dispute. Subsection (3) provided that payment must be made within 30 days of the final determination of the appeal.

5

In 2000 the Income Tax (Amendment) (No. 2) Act, 2000 was enacted. By section 11 it repealed section 62(2) and (3) and replaced it with new provisions. The amendment to the section reads as follows and I think it is important to quote it:

1
    Not applicable [2] The collection and payment of tax shall, notwithstanding any notice of objection or appeal, be enforced in full; [3] No right of an objection or appeal shall be exercised under this Act, unless the taxpayer has paid to the Commissioner the amount of tax assessed and stated in the notice; [4] Notwithstanding subsections (2) and (3) the Commissioner may if satisfied that the taxpayer has no means of paying the assessed tax prior to the objection to the Board, he may require the Board to hear and decide on the objection if the Board considers that there is merit in the objection; [5] All objections notified to the Board shall be heard and decided within sixty days; [6] If the Board decides that the appellant is over charged, the Commissioner shall refund the excess plus interest at the rate of five per centum to the appellant within fourteen days of the making of the decision. [7] Not applicable.
6

The appellant appealed on the basis that the learned trial Judge applied a wrong principle when he concluded that a provision to "pay now and argue later" does not deny a person a right of access to the Court or oust the jurisdiction of the Court. He contends that the correct formulation of the statute was "pay before you object" and that was an unjustifiable fetter on the right of access to the court.

7

There were several grounds of appeal and both sides submitted learned full and thorough skeleton arguments and books of authorities. The argument commenced in the Antigua Sitting of the Court and continued in the St. Lucia sitting some weeks later. This had become desirable because during the argument the issues had become narrowed as consistent premises of law emerged from the argument of both counsel. The nature of the dispute did not allow for a consensual conclusion. I do not think it necessary to recite all the arguments presented as by the end of the case the only issue in dispute was the interpretation of section 62 of the Income Tax Act as amended.

8

The competence of parliament to make laws in the field of taxation ceased to pose any controversy during argument. Taxes are the lifeblood of any democratic society. They enable Government to meet its legal, social and economic obligations to all persons and citizens in the State, to honour its financial obligations to State employees and creditors, to discharge its liabilities to regional and international institutions, and to embark on social and development programs for the benefit of all. It is, therefore, not surprising that Section 9(4) of the Constitution specifically prescribes that nothing contained in or done under the authority of any law shall be held to be unconstitutional to the extent that the law in question makes provision for the taking of any property in satisfaction of any tax except so far as it is shown not to be reasonably justifiable in a democratic society. In reliance on the decisions which have legitimated the consideration of evidence to construe legislation or constitutions 1, the context in which the amendments were introduced was proven by evidence that the 2000 budget gave notice of Government's policy to strengthen its tax collection capacity and one of the strategies involved combating making frivolous appeals which resulted in significant amounts of assessed taxes remaining unpaid. It was uncontested that

the challenged legislation imposed taxes on income. It could not be shown that the section was not reasonably justifiable in a democratic society 2.
9

The taxpayer's right to the protection of law as prescribed by section 3 of the Constitution also ceased to be controversial during argument. The fundamental right of access to the Court which section 3 guarantees has its genesis in Article 6 of the European Convention of Human Rights and has been judicially explained. 3 Although Parliament may in the public interest limit, qualify, or restrict access to a Court or other legal authority without violating the right to the protection of law, the rights guaranteed by the Constitution do require that disputes be resolved by "due process of law" which includes the undisputed right to have civil rights determined by an independent and impartial body established by law...

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