Licensed Buying Companies sue GRA and GCB over payment of VAT on cocoa beans
Some Licensed Buying Companies (LBCs) who are consistently being harassed to register and pay Value Added Tax on their operations have sued the Ghana Revenue Authority (GRA) and Ghana Cocoa Board (GCB) at the High Court in Accra.
Joined in the suit as defendants are the Commissioner-General, GRA and the Chief Executive Officer of GCB.
The GRA, according to the LBC’s had evinced an intention to subject them to pay VAT from 2014 to date.
They further held that the GRA and its Commissioner-General had all along known that the LBCs “merely act as carrying agents for the GCB” and therefore, any VAT engagements should be done by GCB.
The plaintiffs are seeking an order for perpetual injunction restraining the GRA and GCB, acting either by themselves, their agents, officers, assigns, employees or any other persons acting under their instructions from auditing and assessing them for the purpose of them paying VAT.
The Plaintiffs are seeking a declaration that the activities of tracking and haulage of agricultural products, including cocoa, coffee and shea nuts in their raw state, formed part of a chain of many producers and process of the supply of agricultural products in their raw state and they must therefore be exempted from Value Added Tax (VAT).
The plaintiffs are also seeking a declaration that the purported selection or sampling of the these LBCs for audit and assessment for the purposes of levying VAT on them or any completed assessment for the payment of VAT by LBCs was arbitrary, inequitable, unreasonable, unfair, capricious and unlawful.
The plaintiffs are seeking for an order for the GCB and its CEO to fully indemnify and compensate them on full cost recovery basis for all VAT purported to have been assessed, charged and paid by LBCs to the GRA and the Commissioner-General.
The LBCs are further praying the court for the payment of interest on all amounts assessed and ascertained at the prevailing commercial bank lending rates from the date the taxes were paid till date of final payment from the GRA.
The Plaintiffs averred that they were registered companies authorized by the GCB Act, 1988 (PNDCL 81) to purchase cocoa for and on behalf of the GCB.
GCB is also solely responsible for the purchase of cocoa, and provides LBCs with finances and logistics for the purchase and supply of cocoa to its warehouse at the ports.
It is the case of the LBCs that the GRA and through its Commissioner General have all along led them for over 20 years to believe that by law they were exempted from the payment of VAT.
According to the LBCs, the GRA and its Commissioner General know that GCB has an obligation whatsoever by law to pay any VAT applicable, yet they (LBCs) have been targeted ostensibly because the Plaintiffs are private entities and “can be bullied by a government agency”.
According to the plaintiffs GCB had on numerous occasions told them and other LBCs not to register for VAT because they were exempted.
The plaintiffs are averring that the conduct of the GRA and its Commissioner General “is tainted with unreasonableness, arbitrariness, capriciousness and illegality”.
The LBC’s noted that sometime in this year (2019) the GRA started harassing them and other LBCs with correspondence demanding that they register for the purpose of charging VAT and that this act of harassment is ongoing.
They held that despite their numerous engagements with the GCB and its CEO, GCB have adopted “an attitude of willful inaction towards clarifying the position of LBC’s to the GRA and its Commissioner General.
The LBCs averred that the conduct of the GRA and its Commissioner General were causing “unbearable and unjustifiable economic stress to them” and same could cripple their activities if same was not checked.’’
They are of the opinion that GCB has been indifferent and had refused to take any action against the GRA.
The LBCs included Olam Ghana Limited, Kuapa Kooko Company, Federated Commodities Limited, Sika Aba Buyers Limited, CDH Commodities Limited and Cocoa Merchants Ghana Limited.
Others are Adinkanfo Commodities, Unicom Commodities, Licensed Cocoa Buyers, M. Ghazalli Limited, Agroecom Ghana Limited and Nyonkopa Cocoa Buying Limited.