Caribbean Tobacco Enterprises Ltd v Comptroller of Customs
| Jurisdiction | Bahamas |
| Judge | Madam Justice G. Diane Stewart |
| Judgment Date | 24 August 2022 |
| Year | 2022 |
| Court | Supreme Court (Bahamas) |
| Docket Number | Common Law & Equity Division 2019/CLE/gen/01828 |
and
The Hon. Madam Justice G. Diane Stewart
Common Law & Equity Division 2019/CLE/gen/01828
IN THE SUPREME COURT
Mr. Damian Gomez Q.C. and Mr. J. Michael Saunders for the Plaintiff
Mr. Shaka Serville for the Defendants
By a Specially Endorsed Writ of Summons filed 24 th December 2019, the Plaintiff, Caribbean Tobacco Enterprises (“CTE”), a company licensed with the Grand Bahama Port Authority (the “GBPA”) since 1 st April 2013 (the “Plaintiff”), seeks damages and an injunction from the Comptroller of Customs (the “Defendant”), after claiming that it was deliberately and unlawfully compelled to pay excise taxes, which it claims is contrary to the Excise Tax Act 2013 ( the “Excise Tax Act”) and the Excise Stamp (Tobacco Products Control) Act, 2013 (the “Excise Stamp Tobacco Act”). This action was commenced after the Petitioner had applied for judicial review and which they subsequently sought the Court's order to convert that action to a Writ action which was granted.
The Plaintiff alternatively seeks constitutional relief based on its rights founded in the Hawksbill Creek Agreement 1955 and Article 27 of the Constitution of The Bahamas. In the further alternative, the Plaintiff seeks relief from the Defendant for a breach of its Invest Grand Bahama brochure (the “Brochure”), after causing the Plaintiff to act to its detriment and suffer loss and damage.
The Defendants denying that the Plaintiff had an absolute right to any exemption under the Excise Tax Act and the Excise Stamp Tobacco Act. They also deny that the Plaintiff is entitled to any constitutional relief and claim that certain claims against it are statute barred based on the 1 st Defendant being a public body carrying out a public function.
By the Amended Statement of Facts and Issues filed 12 th January 2021, the agreed facts and issues are:-
“FACTS
1. The following facts are established by the Affidavits:-
a. CTE was incorporated on 26 th November 2012.
b. CTE received a licence from the GBPA on 1 st April, 2013 to import and manufacture tobacco products. At all material times CTE operated it's manufacturing and processing business in the Port Area of the GBPA under the provisions of the Hawksbill Creek Agreement.
c. CTE has at all material times been registered under the Excise Stamp Tobacco Act.
d. CTE produces on a monthly basis between 2 million and 3 million cigarettes.
e. No customs duty or excise taxes have been levied against CTE in respect of its imports used to manufacture its cigarettes nor on machinery and equipment used in the manufacturing process.
f. CTE has between April 2014 and 31 st January 2019 been charged excise tax at the rate of 15 cents per cigarette for an aggregate of $6,076,226.21.
g. At the commencement of its business, CTE through a promotional effort, gave away 500,000 cigarettes in order to promote sales. Subsequently, the Inland Revenue Department accused CTE of failure to comply with the relevant statutory position, and stationed one of its employees at the premises of CTE for the purpose of verifying the number of cigarettes manufactured, in order for the excise tax imposed to be accurately monitored and enforced better. CTE was forced to bear the cost of the Inland Revenue Department's posting of its employee at the premises of CTE. The Inland Revenue Department thereby threatened to use its statutory authority to prevent CTE from operating its business as a manufacturer of tobacco products.
h. The Excise Tax Act, Cap. 293A was repealed by the Excise Tax Act, 2013. (See s.18 Excise Tax Act, 2013.) Section 9(2)(i) of the Excise Tax Act, 2013 and chapter 98 of the schedule thereto gave a general exemption from excise tax liability for goods manufactured or processed in the Port Area. (See heading 98.82 and 9882.0000). It is apposite to note that there was a change in the law on this point having regard to section 9 of the Excise Act, Cap. 293A and the schedule thereto paragraph 6 which mirrors 9882.0000. The 2013 Act's schedule is wider in its scope by its inclusion of heading 98.82 “goods manufactured or processed in the Port Area.”
i. The Excise Act, 2013 was amended by the Excise Amendment Act, 2014, the Excise (Amendment) (No.2) Act, 2014, the Excise (Amendment) (No.3) Act, 2014, the Excise ( Amendment) Act, 2016, and the Excise ( Amendment) Act, 2017. The chapter 98 of the schedule was not altered so as to delete the excise tax exemption for goods manufactured or processed in the Port Area. Heading 98.82 remains.
j. CTE objected from as early as 2013 to the imposition of excise tax by communicating with the Minister of Grand Bahama, Dr. Michael Darviile (“Min. Darviile”) and with the Prime Minister and Minister of Finance, Mr. Perry G. Christie. In spite of these protestations and objections the Inland Revenue Department through the Comptroller of Customs continued to levy excise tax on CTE's non export manufactured products in the said Port Area. On the 26 th of October, 2018, Counsel for the Plaintiff, wrote a letter before action to the Comptroller of Customs seeking clarification of the justification for the imposition of the excise tax levied on CTE's non-export manufactured products, which was never responded to.
k. The application for Judicial Review was lodged on 23 rd of January 2019.
The issues to be determined are:
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a. Whether upon a true construction of the Excise Tax Act, 2013 the Comptroller of Customs is entitled to levy Excise Tax upon the tobacco products of CTE manufactured in the Port Area?
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b. Whether upon the true construction of the Excise Tax Act, CTE was entitled to a genera! exemption from excise tax liability for its tobacco products manufactured or processed in the Port Area?
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c. Whether the imposition of excise tax is a breach of the Plaintiff's constitutional rights and those under the Hawksbill Creek Agreement?
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d. If the answers to paragraphs b and c are in the affirmative, what, if any remedies are available to CTE?
The Defendant raised a preliminary issue of whether a portion of the Plaintiff's claim is statute barred?
Mr. Stunce Williams, the President and Director of the Plaintiff (“Mr. Williams”), avers that CTE obtained its licence from the GBPA ( the “GBPA”) on 1 st April 2013, to import, manufacture, process, assemble, export and locally sell tobacco products and related products.
It was also registered and licensed as a manufacturer of tobacco products with the Ministry of Finance under the Excise Stamp Tobacco Act to carry on the business of importing and manufacturing tobacco products in or from the plant in Grand Bahama. In further compliance of the Excise Stamp Tobacco Products Act, the Plaintiff provided the Financial Secretary a bond of $5,000.00.
The Plaintiff produced two to three million cigarettes on a monthly basis. It paid no import duty or excise tax on the raw material imported to use in the manufacture of the cigarettes. Nor did it pay any import duty or excise tax on any of the machinery or plant equipment used in the manufacturing process. The Plaintiff was subjected to the payment of an excise tax of fifteen cents per cigarette from April 2016 to January 2019.
Prior to the Company's incorporation in 2012, he had inquired about the tax exemptions available to manufacturers of cigarettes and tobacco products in New Providence and the wider Bahamas. He spoke with members of the Bahamian government, specifically the Prime Minister and the Minister of Tourism, Mr. Obediah Wilchcombe (“Min. Wilchcombe”) at the time.
Min. Wilchcombe led him to Grand Bahama where he met with employees of the GBPA. Those employees represented to him that their licensees enjoyed immunity from excise taxes on their manufactured products. He was also given the Brochure which they had compiled in collaboration with the Bahamian government.
Based on the information in the Brochure, the Plaintiff was incorporated and licensed as a licensee of the Port Authority. At all material times, the Plaintiff operated its business in and from the Port Area which was created pursuant to the terms of the Hawksbill Creek Agreement and its amendments.
On or about June 2014, he had complained to Min. Darville about the unlawful imposition of excise taxes on the Plaintiff's manufactured tobacco products. The only response he received from Min. Darville, was that he would speak to the Prime Minister and Minister of Finance and revert to him.
The Plaintiff's objection and complaint was about the imposition of excise taxes on its cigarettes produced in the Port Area in Grand Bahama. From April 2014 to 2019, the Plaintiff paid the following amounts annually in excise taxes:
“2014-$127, 592.16.
2015-$230, 611.89.
2016-$171, 072.26.
2017-$1,671, 520.00.
2018-$2,673, 570.00.
2019-$6,076,226.31.”
On 26 th October 2018, he caused the Plaintiff's attorney of record to write to the Comptroller of Customs to challenge the levy of excise taxes on its manufactured products. The Plaintiff never received a response to the said letter. Based on the provisions of the Excise Tax Act and its amendments, the repealed Excise Act Cap 293A and the Excise Stamp Tobacco Act, there was no statutory basis for the imposition of the excise tax.
Mr. Williams verily believed that the Plaintiff was entitled to a refund of their payments to the Comptroller of Customs together with interest pursuant to the Civil Procedure (Award of Interest) Act, Cap 80 which were made from April 2014 to the date of judgment.
During cross-examination, Mr. Williams agreed that CTE did submit themselves to the Hawksbill Creek Agreement and the provisions of the Excise Tobacco Act. The Plaintiff...
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