GRA sued over decision to charge cocoa LBCs VAT

Thirteen cocoa Licensed Buying Companies (LBCs) have sued the Ghana Revenue Authority (GRA) for its decision to charge them value added tax (VAT) on trucking and haulage of cocoa beans for the Ghana Cocoa Board (Cocobod). Joined to the suit filed at the Accra Commercial Court on Monday, November 25 by the lawyer for the LBCs, Charles Tettey, are the Commissioner General of the GRA, Cocobod and its chief executive officer. According to the LBCs, they have for 24 years been exempted from paying VAT until this year when the GRA demanded that they register to pay VAT, something they have described as illegal. They argued that the GRA has been auditing their books for purposes of assessing them for taxes other than VAT, has never ever questioned, requested and or demanded that they register and pay VAT. In their view, any VAT engagements should be directed at Cocobod because the GRA and its commissioner “have all along known” that LBCs “merely act as carrying agents” for Cocobod. Haulage and trucking have traditionally not been part of their core business, the said, adding it was Cocobod which asked them to undertake that task on its behalf. Quoting section 35 and section 3 of the first Schedule of Act 870 as amended, the LBCs held that their activities, particularly trucking and haulage are integral to the supply of raw cocoa to the Cocobod, and inextricable from the supply process. As such, the LBCs argued that the trucking and haulage of cocoa by their members are exempted from Value Added Tax. The GRA, they said, has shown an intention to subject them to VAT payment from the period commencing from 2014 to date. They claim that unless the GRA and its Commissioner General “are specifically restrained by the court, “they will continue with their acts of harassment with the risk to totally collapsing” LBCs. In their view, they are being “targeted, ostensibly because they are the weaker partners” of Cocobod. “The conduct of the GRA and its Commissioner General is tainted with unreasonableness, arbitrariness, capriciousness and illegality,” the LBCs contended in the writ. The GRA and its Commissioner General by their consistent conduct of never having audited, assessed, valued or charged LBCs for VAT, “have entrenched this legitimate expectation of the Plaintiffs and other LBCs”. “It is the plaintiffs’ case that this legitimate expectation is an accrued right, which had purposely and deliberately been led by the GRA to cultivate; therefore, the same is (and should be) protected by Law, Equity and fairness,” the argued.

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What do they want from the court? Accordingly, they are praying the court to grant them a declaration that the activities of trucking and haulage of agricultural products, including cocoa, coffee and sheanuts in their raw state, form part of a chain of many procedures and processes of the supply of agricultural products in their raw state and therefore exempt from VAT. Also, a declaration that the Plaintiffs and other LBC’s who by their operations engage in supply procedures and processes including trucking and haulage of agricultural products in their raw state are exempt from audits, valuations, assessments and payment of VAT. A declaration that the purported or effective selection or sampling of the Plaintiffs and other Licensed Buying Companies (LBC’s) for audits and assessments for the purposes of levying Value Added Tax (VAT) on them or any completed assessment for the payment of VAT by the Plaintiffs is arbitrary, inequitable, unreasonable, unfair, capricious, in bad faith and therefore unlawful, null and of no effect. Further and/or in the alternative to relief (B) above, a declaration that by virtue of the agency relationship between the Plaintiffs (and other LBC’s) and the Ghana Cocoa Board; and/or by virtue of the role played by the Plaintiffs and other LBC’s in relation to the Ghana Cocoa Board, any audit and/or assessment of the Plaintiffs or any other LBC’s for the payment for Value Added Tax (VAT) that leads to any tax liability on the Plaintiffs is a liability incurred by the Plaintiffs on behalf of the Ghana Cocoa Board; and, therefore, the 3rd defendant (Ghana Cocoa Board) is ultimately liable to be discharge any such VAT liability. An order of perpetual injunction restraining the GRA, acting either by themselves, their agents, officers, assigns, employees or any other person acting under their instructions from ever auditing, purporting to audit, assessing or purporting to assess the Plaintiffs for the Purposes of charging the Plaintiffs to pay Value Added Tax (VAT). Further or in the alternative to the above reliefs, an order for the 3rd and 4th Defendants to fully indemnify and compensate adequately the Plaintiffs on a full cost recovery basis for all Value Added Tax (VAT) purported to be assessed, actually assessed, charged and paid by the Plaintiffs to the 1st and 2nd Defendant. They also want interest on all amounts assessed and ascertained from relief at the prevailing commercial rates from the date when the taxes may have be paid till the date of final payment.
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