Senior Reporter
derek.achong@guardian.co.tt
A transport company has succeeded in its appeal against the Board of Inland Revenue (BIR) over its refusal to accept a corporation tax return filed six years late.
Delivering an oral judgment late last month, Chief Justice Ronnie Boodoosingh and Appellate Judges Peter Rajkumar and Joan Charles upheld the appeal by Absolute Transport Ltd against the BIR.
In 2018, the BIR wrote to the company warning that it intended to conduct a best-judgment assessment of its tax liability for 2012 because it had failed to file a tax return.
In September 2019, the company sought to file the return, but its attempt was rejected on the basis that the statutory deadline for filing it had long expired.
The company, through its lawyers Barrie Attzs and Gary Ramkissoon of Attzs Law, filed a lawsuit seeking an interpretation of several provisions of the Income Tax Act dealing with the filing deadline.
It argued that the obligation to file a return was continuous and that the legislation did not impose a limitation period that the BIR could rely on to refuse to accept a return.
The case was dismissed by High Court Judge Nadia Kangaloo, leading to the appeal.
In determining the appeal, the panel considered the effect of Section 76(1) of the legislation, which states that individuals and entities should file their tax returns within four months after the end of the relevant year of income.
Noting that the legislation did not expressly exclude late submissions, the panel considered the four-month period to be a due date that may attract penalties for late submission, rather than a limitation period.
The judges referred to penalties under the Corporation Tax Act, which they said would be difficult to reconcile with the BIR’s position that the obligation to file a return expired after the four-month period.
The panel then considered the effect of Section 83 of the Act, which permits the BIR to make a best-judgment assessment where a taxpayer has failed to submit a return or where it is not satisfied with the self-assessment made by a taxpayer in a return.
The section allows the BIR to impose additional tax on chargeable income at any time within the year of income or within six years after the expiration of the year of income, or three years from the date the tax return is filed, whichever is later, if it has legitimate concerns about the self-assessment.
The panel held that the BIR’s assessment review power is remedial and did not convert the four-month filing deadline into a limitation period, as claimed.
The panel found that the BIR could conduct an assessment if it did not receive a return, but must consider a late return once it was delivered.
The judges found that the BIR could then decide whether to accept, reject, amend or otherwise act on the taxpayer’s stated liability in accordance with the Act within the timeframe set out in Section 83.
The taxpayer may then take legal action before the Tax Appeal Board to challenge any variation between its assessment and the assessment conducted by the BIR.
Turning to the BIR’s refusal to accept the late return, the panel found that the legislation would have to expressly provide for such a refusal, given the serious legal consequences that would result.
In upholding the appeal, the panel ordered both parties to bear their own legal costs.
The BIR was represented by Rorey Gaya and Karuna Singh.
