Over ten Licensed Buying Companies (LBCs) who are into buying cocoa beans have filed a writ at an Accra High Court to stop two state institutions and their Chief Executives from charging them Value Added Tax (VAT) on the trucking and haulage of cocoa beans for the Ghana Cocoa Board (COCOBOD).
They argue that they are authorized by the Ghana Cocoa Board Act, 1984 (PNDCL 81) to purchase cocoa for and on behalf of the Ghana Cocoa Board.
24 years without VAT
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.
The writ dated Monday, November 25, 2019, was against Ghana Revenue Authority (GRA), Commissioner General of GRA, Ghana Cocoa Board (COCOBOD), and Chief Executive of COCOBOD.
List of Licensed Cocoa Buying Companies
The companies include Kuapa Kooko Co. Ltd, Federated Commodities Co. Ltd, Sika Aba Buyers Ltd, CDH Commodities Ltd, Adikanfo Commodities Ltd, Olam Ghana Ltd and Unicom Commodities Gh Ltd.
The others are Licensed Cocoa Buyers Ass. Of Ghana (LICOBAG), Agroecom Ghana Ltd, Nyonkopa Cocoa Buying Ltd, COCOA Merchants Gh. Ltd 19, M. Ghazalli Ltd.
They argued that the GRA has been auditing their books for purposes of assessing them for taxes other than VAT and has never ever questioned, requested and or demanded that they register and pay VAT.
COCOBOD should pay the 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 not part of our core business
The LBCs argued that Haulage and trucking have traditionally not been part of their core business but 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 VAT.
VAT payment from 2014 to date
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 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.
Reliefs sought
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 exempted from VAT.
Exempt trucking and haulage of agricultural products from VAT
They also want the trucking and haulage of agricultural products in their raw state exempted from audits, valuations, assessments and payment of VAT.
According to them, the purported or effective selection or sampling of the LBCs for audits and assessments for the purposes of levying Value Added Tax (VAT) on them or any completed assessment for the payment of VAT is arbitrary, inequitable, unreasonable, unfair, capricious, in bad faith and therefore unlawful, null and of no effect.
COCOBOD liable to be discharge any such VAT liability
In their view, any audit and/or assessment of the LBC’s for the payment of VAT) that leads to any tax liability on the LBCs is a liability incurred by them on behalf of the Ghana Cocoa Board; and, therefore, COCOBOD is ultimately liable to be discharge any such VAT liability.
Perpetual injunction restraining GRA
They are seeking 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 LBCs for the purposes of charging them VAT.
Indemnify and compensate LBCs
They also want an order for the COCOBOD and its Chief Executive to fully indemnify and compensate adequately the LBCs on a full cost recovery basis for all VAT purported to be assessed, actually assessed, charged and paid by the LBCs to GRA.
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.
Source: Elvis DARKO, thefinderonline.com