DELICO PROPERTY DEVELOPMENTS LIMITED VRS THE COMMISSIONER - GENERAL

IN THE SUPERIOR COURT OF JUDICATURE, IN THE HIGH COURT OF JUSTICE, GHANA (COMMERCIAL DIVISION 4) HELD IN ACCRA ON WEDNESDAY THE 30TH JULY, 2025 BEFORE HER LADYSHIP JUSTICE AFI AGBANU KUDOMOR (MRS.) 

SUIT NO.: CM/TAX/0540/2024

 

IN THE MATTER OF AN APPEAL BY DELICO PROPERTY DEVELOPMENTS LIMITED AGAINST THE TAX OBJECTION DECISION BY THE COMMISSIONER-GENERAL OF THE GHANA REVENUE AUTHORITY

 

BETWEEN

 

DELICO PROPERTY DEVELOPMENTS LIMITED

C/O INTERCONTINENTAL TRUST LTD. LEVEL 3 ALEXANDER HOUSE

35 CYBERCITY 72201 EBENE

MAURJTIUS

APPELLANT

 

VRS.

 

THE COMMISSIONER - GENERAL

GHANA REVENUE AUTHORITY HEAD OFFICE

NO. 91 OFF STARLET ROAD MINISTRJES

ACCRA, GHANA.

 

JUDGMENT

Appellant is dissatisfied with Respondent's objection decision dated 19th April 2024 and seeks the following reliefs from the Honourable Court against Respondent:

 

1.     An order quashing the Audit report dated 3rd May 2022 and the tax assessment contained in it.

 

2.      An order quashing the parts of the Objection Decision dated 19thApril, 2024 that created a new tax assessment against Appellant.

 

3.     An order reversing Respondent's decision to adjust the agreed interest rate on the shareholder loans from 10% p.a. to 3.25%p.a.

 

4.     An order restoring the interest rate to the agreed 10% p.a.

 

5.     An order directing Respondent to pronounce that the Ghana Revenue Authority refunds the sum of Four Hundred and Forty-Seven Thousand, Seven Hundred and Twenty-Nine United States Dollars and Thirteen Cents (USD447, 729.13) (which

 

Appellant has paid on account of the tax assessment) to Appellant within 3 months after judgment or at such other time that the Honourable Court may deem reasonable.

 

6.     Any other order(s) that the Honourable Court considers just.

 

 

APPELLANT'S CASE

 

Appellant, a Mauritius incorporated company until March 2019 was a shareholder of Delico Achimota Ghana Limited (Delico Achimota), a Ghana incorporated company; its business in property management.

 

In March 2019, per a Share Purchase Agreement, Appellant transferred 97.5% of its shares and its shareholder loans in Delico Achimota to a third party.

 

That because the share price was determined in part by the shareholder loans, it negatively affected the share price; resulting in a capital loss to Appellant.

 

In 2022, Respondent, the Executive Head of the Ghana Revenue Authority (GRA) audited the business affairs of Delico Achimota for 2019 without involving 'Appellant.

 

Following the said audit, Respondent assessed a total tax liability of Four Million, Four Hundred and Seventy-Seven Thousand, Two Hundred a cl Ninety-One United States Dollars and Twenty-Five Cents (USD4, 4n,291.25) against Appellant purportedly being capital gains that Appellant made through the sale of shares under the said Share Purchase Agreement.

 

The above liability was contained in a final audit report dated 3rd May, 2022 which Respondent failed to serve on Appellant. Appellant denies Respondent's claims to have served the said audit report on Appellant's subsidiary for onward transmission to Appellant.

 

On 8th June 2023, Respondent eventually delivered a copy of the audit report to Appellant's lawyers. Appellant's lawyers in a letter dated 15th June, 2023 disagreed with the conclusions of the Audit report on ground that Respondent had not given Appellant the chance to be heard and so the said tax assessment was based on Respondent's misunderstanding of the transaction Appellant had been audited on.

 

Appellant subsequently challenged the tax assessment by an objection letter dated 7thJuly, 2023 mainly on grounds that Appellant had not made a gain on the transaction and so was not liable for tax. That Respondent's conclusion that the shareholder loans were fictitious was wrong because there were both commercial and economic basis for the loans.

 

Prior to that, Respondent exercised his discretion under section 42 of the Revenue Administration Act granted Appellant's request of the variation of the down payment of 30% of the dispute tax liability to 10%; pursuant to which Appellant paid Four Hundred and Forty-Seven Thousand, Seven Hundred and Twenty-Nine United States Dollars and Thirteen Cents (USD447, 729.13) on 25th July, 2023.

 

 

 

Respondent in an objection decision dated 19thApril, 2024 substantially dismissed Appellant's objection and reversed its earlier position that the shareholder loans were fictitious; in essence admitting that Respondent was wrong in its earlier conclusion.

 

However, Respondent did not reverse the tax assessment in the audit report and rather raised a new ground that the said loans were not contracted at arm's length as the interest rate of 10% per annum was excessive and prohibitive. Based on this position, Respondent reduced the interest rate from 10% per annum to 3.25% per annum. This was also done without giving Appellant the opportunity to be heard.

 

Respondent after the said objection assessed Appellant's tax liability to be Nine Hundred and Seventy Thousand, Three Hundred and Eighty-Five United States Dollars and Thirty-Three Cents (USD970, 385.33).

 

Appellant is dissatisfied with the said objection decision of Respondent and appeals against the said decision on the following grounds:

 

1.     Respondent erred in law in making his quasi-judicial decision on a tax objection (i) by failing to limit his decision to the tax assessment and objection before him, (ii) by exceeding and abandoning the scope of the tax objection (i.e. whether a shareholder loan was genuine or fictitious); and (iii) by substituting a whole new question for determination (i.e. whether or not the interest on the shareholder loan was at arm's length), without any basis, and without giving the party bringing the objection (the Appellant) the opportunity to be heard on the new question.

 

2.     The Respondent exceeded his legal powers by turning the objection into a tax assessment on its own.

 

3.    The Respondent misapprehended, misapplied and misinterpreted the law on transfer pricing, as well as international best tax practices (which Ghana follows) and thus unlawfully and arbitrarily decided that the interest rate chargeable on shareholder loans advanced by the Appellant company to its subsidiary should be reduced from 10% to 3.25%.

 

 

RESPONDENT'S CASE

 

Respondent's case is that on 23rd March 2021, Respondent through its Large Taxpayer Office served an introduction letter on Delico Achimota to conduct a comprehensive audit on all relevant tax types applicable to it. Exhibit GRA2 is a copy of the said introductory letter.

 

During the fieldwork of the Audit on Delico Achimota, the audit officers discovered that until 22 March, 2019, Appellant held 97.5% of the shareholding interest in Delico Achimota and that per a Sale Purchase Agreement, Appellant had divested its shareholding interest and a corresponding shareholder loan in the said Delico Achimota to a third party known as GrowthPoint Investec African Properties Limited. Exhibit GRA3 is a copy of the said Share Purchase agreement.

The said audit focused on the divestiture of both the shareholding interest and shareholder loan in order to establish whether the transaction had occasioned capital gains for which capital gains tax was supposed to be charged and paid to the Ghana Revenue Authority under the Income Tax Act, 2015 (Act 896) as amended.

 

Consequently. the routine audit procedures including questioning and gathering of sufficient and appropriate documents of the transactions were routed through officials of Delico Achimota.

 

However, the documents provided to the audit team were not sufficient as relevant documents on the procurement, disbursement and utilization of the shareholder loan were not made available to the audit team despite persistent requests and reminders to Delico Achimota.

 

Armed with the limited information, the team reviewed the available documents and came to a reasonable conclusion that the shareholder loan was fictitious and discounted i in the bundled divestment transaction based on section 34(1) of the Income Tax Act, 2015 (Act 896) as amended.

 

The audit team further established that per section 3(3), 38 (la) and 105 (m)(i) of the Income Tax Act, 2015 (Act 896) as amended, a domestic asset in the form of divestiture of shares in a local company had been realized with a resulting tax gain assessable to tax as Two Million, Seven Hundred and Twenty-Six Thousand, Five Hundred and Forty-Seven United States Dollars and Seventy Cents (USD2,726,547.70) at a rate of 25%. An interest of One Million, Seven Hundred and Fifty Thousand, Seven Hundred and Thirty-One United States Dollars and Six Cents (USDl,750,731.06) was also charged on outstanding tax pursuant to section 71 of the Revenue Administration Act 2016 (Act 915) as amended. The total liability assessed amounted to Four Million, Four Hundred and Seventy-Seven Thousand, Two Hundred and Ninety-One United States Dollars and Twenty-Five Cents (USD4, 477,291.25).

 

According to Respondent, the letter of notice of Assessment dated 3rd May 2022 and the audit report with the accompanying schedules/attachments were issued and served on Appellant through its authorized representative, ENS Ghana on 8th June, 2023. However, it was on 7th July, 2023 that Appellant objected to the Tax assessment.

 

In its tax objection, Appellant argued that the shareholder loan was not fictitious and provided further and better particulars to substantiate the existence and validity of the loan. Exhibit GRAS is a copy of the said objection letter together with the relevant attachments comprising some bank statements, breakdown of the loan payments to Delico Achimota and extract of the audited financial statements.

 

These new documentations provided were examined by Respondent who in their considered view noted that appellant had advanced a loan to Delico Achimota but had issues with the value of he said loan (comprising the principal and interest); as the accrued interest of United States Dollars was exorbitant and the interest rate of 10% charged on the loan was unusual and appeared prohibitive especially given that they are related parties.

 

In Respondent's quest to establish whether the shareholder loan was fictitious and being dissatisfied with the prohibitive interest rate of 10%, Respondent consulted with the Transfer

 

Pricing Unit to examine the interest rate to ascertain whether it met the arm's length threshold in compliance with section 31 of the Income Tax Act, 2015 (Act 896) as amended.

 

The Transfer Pricing Unit in turn sought a comparable uncontrolled price in the real estate industry for benchmarking. Due to the fact that the loan was dollar denominated, the Transfer Pricing Unit resorted to the globally renowned Transfer Pricing Database, TP Catalyst and undertook a careful and thorough search to identify loans with similar characteristics.

 

The search indicated a median rate of 3.25% with interquartile range comprising an upper quartile of 3.25% and a lower quartile of2.75%; meaning that if the median rate of 3.25% had been used to calculate the interest charged by Appellant, the face value of the shareholder loan would not have been reported in the books of Delico Achimota as Fourteen Million, Twenty-Three Thousand, Five Hundred and Three United States Dollars and Seventy-Five Cents (USD14,023,503.75) but rather Eight Million, Five Hundred and Twenty-Six Thousand, Six Hundred and Sixty-Seven United States Dollars and Eleven Cents (USDS,526,667.11). Exhibit GRA6 is a copy of the TP Catalyst Database search result.

 

Consequently, the difference of Five Million, Four Hundred and Ninety-Six Thousand, Eight Hundred and Twenty-Six United States Dollars and Sixty-Four Cents (USDS, 496,826.64) reported as part of the shareholder loan in the books of Delico Achimota was fictitious and of no economic substance for tax purposes in line with section 34(1) of the Income Tax Act, 2015 (Act 896) as amended.

 

Hence, in furtherance of its mandate, the Objection Review Committee disallowed the said fictitious component based on section 31(2) of the Income Tax Act, 2015 (Act 896) as amended; resulting in the revision of the capital gain tax assessment from Four Million, Four Hundred and Seventy-Seven Thousand, Two Hundred and Ninety-One United States Dollars and Twenty-Five Cents (USD4,477,291.25) to Nine Hundred and Seventy Thousand, Three Hundred and Eighty-Five United States Dollars and Thirty-Three Cents (USD970,385.33).

 

Additionally, the said Committee granted to Appellant tax credit of Four Hundred and Thirty-Nine Thousand, Seven Hundred and Forty-Six United States Dollars and Thirteen Cents (USD439, 746.13) and Four Hundred and Forty-Seven Thousand, Two Hundred and Fifty-Three United States Dollars and Sixty-Five Cents (USD 447,253.65) being the withholding tax paid on the fictitious interest and the 10% deposit paid respectively to Ghana Revenue Authority; hence reducing the outstanding tax liability to Eighty-Three Thousand, Three Hundred and Eighty-Five United States Dollars and Fifty-Five Cents (USD83,385.55); notice of which was served on Appellant per a letter dated 19th April 2024. Exhibit GRA7 is a copy of the said report.

 

According to Respondent, Appellant's claims that Respondent's conclusion that the basis of the revised tax liability has been changed or replaced with a new basis and so the taxpayer should have been given the opportunity to defend itself is incorrect and patently unfounded.

 

This is because the Objection Review Committee had the opportunity to review the additional documentation provided by Appellant in support of the objection to tax assessment and rightfully concluded that the said amount of Five Million, Four Hundred and Ninety-Six Thousand, Eight Hundred and Twenty-Six United States Dollars and Sixty-Four Cents (USDS, 496,826.64) out of Fourteen Million, Twenty-Three Thousand, Five Hundred and

Three United States Dollars and Seventy-Five Cents (USD14,023,503.75) 1s fictitious necessitating the revision of the tax liability.

 

 

ISSUES TO BE DETERMINED BY THE COURT

 

Considering the grounds of Appeal, the determination of the following issues will be of considerable assistance to the Court in the instant tax appeal:

 

 

1.      Whether or not Respondent erred in his decision on the tax objection by

 

(i)                           failing to limit his decision to the tax assessment and tax objection before him,

 

(ii)                          by exceeding and abandoning the scope of the tax objection (i.e. whether a shareholder loan was genuine or fictitious);

 

(iii)                        and by substituting a whole new question for determination (i.e. whether or not the interest on the shareholder loan was t arm's length), without any basis, and without giving the party bringing the objection (the Appellant) the opportunity to be heard on the new question.

 

 

2.      Whether or not Respondent exceeded his 1egal tax assessment on its own.

powers by turning the objection into a

 

3.     Whether or not Respondent misapprehended, misapplied and misinterpreted the law on

transfer pricing, as well as internationalbest tax practices (which Ghana follows) and thus unlawfully and arbitrarily decided that the interest rate chargeable on shareholder loans advanced by the Appellant Company to its subsidiary should be reduced from

10% to 3.25%.

DISCUSSION AND ANALYSIS

Issues 1 and 2 will be discussed together.

 

ISSUE 1: WHETHER OR NOT RESPONDENT ERRED IN HIS DECISION ON THE TAX OBJECTION BY:

 

failing to limit his decision to the tax assessment and tax objection before 1m,

by exceeding and abandoning the scope of the tax objection (i.e. whether a shareholder loan was genuine or fictitious);

 

(iii)            and by substituting a whole new question for determination (i.e. whether or not the interest on the shareholder loan was at arm's length), without any

basis, and without giving the party bringing the objection (the Appellant) the opportunity to be heard on the new question.

 

 

ISSUE 2: WHETHER OR NOT RESPONDENT EXCEEDED HIS LEGAL POWERS BY TURNING THE OBJECTION INTO A TAX ASSESSMENT ON ITS OWN.

 

In order to discuss these issues, there is the need to distinguish between the procedure for tax assessment by the Commissioner General and the procedure for the determination of a tax objection by the Commissioner General.

 

Respondent performs both an administrative and quasi-judicial function. When Respondent is making a tax assessment, he performs an administrative function and is required to use his best judgment and information reasonably available to him to reach a conclusion on a tax payer's liability in accordance with section 37 (4) of the Revenue Administration Act, 2016 (Act 915).

 

In performing this administrative function, Respondent conducts investigations, makes determination of facts and exercises his discretion as he deems fit.

 

Once Respondent makes a tax decision, under section 42 of the Revenue Administration Act, 2016 (Act 915), a tax payer can challenge the decision if dissatisfied with it.

 

Under section 43(1) of the Revenue Administration Act, 2016 (Act 915), Respondent after considering an objection may vary the tax decision in whole or in part; or disallow the objection.

 

When considering the tax objection, Respondent exercises a quasi-judicial function and so is bound by the principle of natural justice in the same manner as all judicial bodies.

 

In the case of The Commissioner of Income Tax v. Maatschappij de Fijnhouthandel N.V. (Fynhout) [1974] lGLR 283, the Court of Appeal acknowledged this distinction in Respondent's powers and the stages at which the administrative powers and quasi-judicial powers will apply.

 

In this case, the Commissioner of Income Tax had assessed a tax liability against Respondents on the basis that despite being a foreign company, Respondents were chargeable with income tax.

 

Respondents filed an application in the High Court, praying for leave to apply for an order of certiorari to remove and quash the income tax assessments and the order for payment. The said application was dismissed by the High Court but the Court of Appeal allowed Respondents' appeal and quashed the assessments made by the Commissioner. However, the review panel of the Court of Appeal reversed the decision of the ordinary bench of the Court of Appeal to grant the certiorari order on grounds that because Respondents did not raise a tax objection, the Commissioner's decision remained an administrative decision and so was not subject to judicial review. The review panel of the Court of Appeal endorsed the previous panel's correct statement of the law regarding the difference between the Commissioner's powers of tax assessment as against when considering a tax objection.

Quoting the previous panel's judgment, the review panel stated at page 297 as follows:

 

"It follows that the commissioner has power to make an assessment, computed to the best of his judgment, with or without the presence of a return filed by the person liable to be assessed. His role at this stage is purely of an administrative character because he may or may not have all the relevant materials before him and he is enjoined by paragraph 46 to do so to the best of his judgment thus allowing him sufficient latitude and amplitude to exercise his discretion as he thinks fit."

 

The review panel went on to state the Commissioner's powers when considering a tax objection as considered by the previous panel's judgment as follows:

 

''[T]he import of the whole sub-paragraph is to the effect that the commissioner should consider the objections raised. In other words, he cannot refi1se to consider the objections; he cannot shut his eyes or close his ears to them. This means that he must act judicially once the objections have been brought to his notice. His earlier role of an administrative agent computing assessment to the best of his judgment is transformed into an entirely different role as an adjudicator who must act judicially after objections have been raised and brought to his notice. As an adjudicating authority, he is caught by the J?. ovisions of article 114 of the constitution and his decisions are subject to the supervisory P.OWers of the court including the power to grant an order of certiorari to quash his assessment on..gJounds known to the law. "

 

In the Fynhout case (supra), the Court of Appeal urthe end0rsfcrthe dicta of the English Court of Appeal in Errington v. Minister of Health 1935] KB 249, CA at 293 where the Court stated that:

 

"From the moment an objection is made the Minister is exercising quasi-judicial functions, but it seems to me to be clearly recognised.by the Court of Appeal that up to the time of objection being made the Minister acts in an administrative, not a judicial capacity."

 

In the tax appeal before this Court, Appellant'scase is that, in the tax decision, Respondent made a whole new tax assessment in a mannerthat was not only procedurally wrong but unjust. That once Appellant lodged its objection letter (Document 7), Respondent was enjoined to review and revise the tax decision based on information already before it.

That Respondent was exercising a quasi-judicial function and not exercising an administrative function permitting him to conduct a new tax assessment on different grounds other than what was before him. That Respondent should have been guided by its own Audit Report (Document 3) and the Grounds of Appeal in Appellant's objection letter (Document 7).

 

When the Revenue Administration Act, 2016 (Act 915) is read as a whole it is clear that the law imposes limitations on how Respondent can exercise his administrative powers of tax assessment even where Respondent purports to do so while performing his quasi-judicial function of reviewing a tax objection.

 

Section 39(1) of the Revenue Administration Act, 2016 (Act 915) entitles Respondent to adjust an assessment in a manner that ensures that the tax payer is liable for the correct amount of tax. in the circumstances to which the assessment relates.

 

 

However, section 39(2) of Act 915 stipulates that the Respondent must use his best judgment and information reasonably available in making an adjusted assessment. This imposes an obligation on Respondent to make further enquiries where it is reasonable to do so before making an adjusted assessment.

 

From a combined reading of section 43 (1) and section 39 (2) of the Revenue Administration Act, 2016 (Act 915), it is clear that Respondent's power in varying a tax decision in whole when exercising a quasi-judicial function must be read together with Respondent's obligation to seek reasonably available information.

 

It is the Court's opinion that Respondent ought to have sought reasonably available information from Appellant when he discovered a new ground to justify a tax liability against Appellant in the course of considering the tax objection. This is because this is the fairest procedural manner for Respondent in deploying both his administrative function and quasi-judicial function at the same time and adhere to the principle of natural justice.

 

It is trite that administrative bodies taking decisions affecting people perform quasi-judicial functions and must adhere to the rules of natural justice.

 

In L'Air Liquide v. Anin [1991] lGLR 460, the Court of Appeal held as follows:

 

"The general basic principle about these administrative inquiries is that whenever people are given power by law to consider facts and arrive at conclusions affecting the fate of human beings, they are performing a quasi-judicial function. And although not a court, if the body violates the rules of natural justice, the courts have the power to declare the procedure invalid, as well as the conclusions therefrom. The rules of natural justice are two: first, that a man may not be condemned unheard; and secondly, that a man must not be a judge of his own cause."

 

It is not in question that Ghana Revenue Authority (GRA) is an administrative body. In Interclass Associates Ltd v. Ghana Revenue Authority (unreported decision Civil Suit No. Hl/114/16 dated 14th July 2016, the Court of Appeal stated as follows:

 

"It is indeed right to say that Respondent, Ghana Revenue Authority is an administrative body within the contemplation and ambit of article 23 (of the 1992 Constitution). This body is charged with the responsibility of administering the tax regime in Ghana. "

 

Article 23 of the 1992 Constitution imposes a duty on administrative bodies (such as the GRA) and administrative officials (such as Respondent) to act fairly and reasonably and to comply with the requirements imposed on them by law.

 

When an administrative body or official exercises discretionary statutory powers, Article 296

(a) and (b) of the 1992 Constitution imposes a duty on the administrative body or official to be fair, candid and not to exercise the said discretion in an arbitrary, capricious or biased manner.

 

See the case of Awuni v. West African Examination Council [2003-2004] SCGLR 471. In this case, the Supreme Court listed among others the quality of what is fair and reasonable as the opportunity to be heard.

 

 

 

Although the issue which triggered the tax objection was whether or not the Shareholder Loan was genuine or fictitious, the issue on which Respondent purported to base the objection decision was whether or not the interest rate on the shareholder loan was at arm's length.

 

That being so, this Court is of the opinion that Respondent ought to have invited Appellant to be heard on the new issue.

 

Respondent also failed to use its wide-reaching powers under Act 915 to request any information from Appellant to determine whether the shareholder loan was at arm's length even though there was reasonable cause to do so.

 

Respondent is mandated by section 40(2) (f) of Act 915 to give reasons for the determination of any tax assessment.

 

In Appou v. Annou [1980] GLR 883, the Court of Appeal stated that ·"A litigant who has lost his case and is desirous of appealing deserves to know the reasons for the decision so that he can appeal where a right of appeal exists. "

 

Respondent based its tax decision in the Audit Report (Document 3) on the Sale Purchase Agreement dated 22nd March, 2019 (Document 1).

 

In analysing the said Document 1, Respondent concluded that the shareholder loan was fictitious and used this as a reason to discount the loan in reaching the tax assessment.

 

The said Document 1 defines the Shareholder Loan Agreement as a loan agreement governing shareholder loans at an interest rate of 10% p.a. Thus, at the time of issuing the said Audit Report, Respondent was aware of the interest rate which despite being obvious was never questioned by Respondent as to whether t e shareholder loan was at arm's length. Respondent also never gave the loan interest rate as a basis for assessing the tax liability against Appellant.

 

To the extent that Appellant relied on the reasons given by Respondent in the tax decision to file its tax objection which at the time had nothing to do with the interest rate which was not in issue, Appellant could not have presented any evidence to explain the reason why the interest rate was 10% p.a.

 

This Court is of the opinion that if in the course of reviewing its tax decision, Respondent discovered a new ground for assessing tax against Appellant, Respondent ought to have notified Appellant of the new ground and invited it to be heard.

 

For failing to hear from Appellant on the issue of the interest rate, it is the Court's opinion that Respondent did not have the requisite information needed to accurately determine the appropriate interest ratefor the transaction.

 

In summary, the Court finds that Respondent erred in making his quasi-judicial decision on a tax objection by:

 

i.       failing to limit his decision to the tax assessment and tax objection before him,

 

ii.     exceeding and abandoning the scope of the tax objection which 1s whether the shareholder loan was genuine or fictitious, and

•      I

 

iii.    substituting a completely new question for determination which is whether or not the interest on the shareholder loan was at arm's length without any basis and without giving the Appellant the opportunity to be heard on the new question.

 

On the second issue, the Court finds that Respondent exceeded his legal powers by turning the objection into a tax assessment of his own.

 

 

ISSUE 3: WHETHER OR NOT RESPONDENT MISAPPREHENDED, MISAPPLIED AND MISINTERPRETED THE LAW ON TRANSFER PRICING, AS WELL AS INTERNATIONAL BEST TAX PRACTICES (WHICH GHANA FOLLOWS) AND THUS UNLAWFULLY AND ARBITRARILY DECIDED THAT THE INTEREST RATE CHARGEABLE ON SHAREHOLDER LOANS ADVANCED BY THE APPELLANT COMPANY TO ITS SUBSIDIARY SHOULD BE REDUCED FROM 10% PER ANNUM TO 3.25% PER ANNUM.

 

 

Order 54 rule 9 of the High Court (Civil Procedure) Rules, 2004 (C.1.47) which regulates Tax Appeals provides as follows:

 

"9. The Court upon hearing an appeal under this Order may take evidence or seek expert's assistance and may confirm, reduce, increase or annul an assessment on which the decision is based and may in all cases make such decisions as the court considers appropriate. "

 

This provision clearly shows that the Court if of the opinion that it needs a Tax Expert's assistance in the hearing of a tax appeal may seek the said assistance from a Tax Expert.

 

Although Appellant has filed a Tax Expert Report (Document 26), this Court is of the opinion that it may be one sided especially as neither the Court nor Respondent had the benefit of cross examining the author of the said report on his findings that the interest rate of 10% per annum on the Shareholder Loan was at arm's length.

 

The law clearly states that it is the Court that ought to appoint a Tax Expert should it seek assistance from the said Tax Expert and not any of the parties before the Court.

 

At this stage, it will be an exercise in futility for me to make a definite pronouncement on whether or not the interest rate of 10% per annum on the shareholder loan was at arm's length without seeking the assistance of a Tax Expert; as I am not a Tax Expert.

 

In that regard, the Court hereby appoints an Independent Tax Expert to determine whether or not the interest rate of 10% per annum of the Shareholder Loan was at arm's length, whether or not its reduction from 10% per annum to the 3.25% per annum by Respondent was proper; and to advise the Court on the appropriate interest rate to be applied; if the said reduction was not proper.

 

The cost of the Tax Expert's work is to be borne equally by both parties.

 

 

 

 

(SOD.)

AFI AGBANU KUDOMOR, J (MRS.) (JUSTICE OF THE HIGH COURT)

 

 

COUNSEL

 

1.                 NAA AMAKUMA BARNOR FOR DAVID A ASIEDU FOR APPELLANT - PRESENT

 

2.                 PATRICK KWEKU INTARMAH WITH MIMI KWARTENG AND CECILIA BONA KWARTENGFOR REPONDENT-PRESENT

 

 

LIST OF CASES

 

1.                 THE    COMMISSIONER     OF    INCOME     TAX    Y.    MAATSCHAPPIJ     DE FIJNHOUTHANDEL N.V. (FYNHOUT)     [1974] 16283

 

2.                 ERRINGTON V. MINISTER OF HEALTH

 

3.                 L'AIR LIQUIDE V. ANIN [1991] 1GLR460

 

4.                 IN INTERCLASS ASSOCIATES LTD ¥.      GHANA REVENUE AUTHORITY (UNREPORTED DECISION CIVIL SUIT NO. Hl/114/16 DATED 14TH JULY 2016

 

5.                 AWUNIV. WEST AFRIGANEXAM

 

6.                 APPOU V. ANNOU [1980] GLR 883

 

 

STATED LAWS

ATION COUNCIL [2003--2004] SCGLR471.

1.                 SECTION 37 (4) OF THE REVENUE ADMINISTRATION ACT, 2016 (ACT 915)

 

2.                 SECTION42 OF THE REVENUE ADMINISTRATION ACT, 2016 (ACT 915)

 

3.                 SECTION 43(1) OF THE REVENUE ADMINISTRATION ACT, 2016 (ACT 915)

4.                 SECTION 39 1 OF THE REVENUE ADMINISTRATION ACT, 2016 (ACT 915)

 

5.                 SECTION 39 (2) OF THE REVENUE ADMINISTRATION ACT, 2016 (ACT 915)

 

6.                 ORDER 54 RULE 9 OF THE HIGH COURT (CIVIL PROCEDURE) RULES, 2004 (CJ.47)