VAT commissioner accused of discrimination

A company yesterday filed a constitutional application in the First Hall of the Civil Court claiming that its fundamental human right to freedom from discrimination had been violated by the Commissioner for Value Added Tax.

In its application Woodline Ltd declared that it owed the commissioner Lm53,871.46 in VAT, Lm28,726.16 in additional tax and penalties and Lm5,322 in interest. In the course of proceedings filed, the company was served with a judicial letter issued by the commissioner for VAT. The company was informed that unless these sums were paid, judicial warrants would be issued against the company and criminal proceedings filed against its directors. As a result of this letter, the company had paid the commissioner of VAT the total sum of Lm87,920.30.

However, following this payment, the commissioner had published a Scheme for the Reduction of Additional Tax. In terms of this scheme, any person who had not observed the law would be given a substantial deduction of 90 per cent on the penalties due in connection with VAT 1995. This was the same VAT in respect of which the company had paid over Lm87,000 to the commissioner. The scheme also provided for substantial reductions in the interests due.

The issue of the scheme by the commissioner, submitted the company, was in violation of its right to freedom from discrimination, as protected by the European Convention of Human Rights.

Woodline Ltd submitted that the scheme discriminated against those persons who had complied with the VAT legislation or who had paid the penalties and fines imposed on them. Such taxpayers who had never paid their fines and ignored the summons against them had subsequently benefited from an amnesty on the part of the commissioner of VAT and ended up paying far less than the sums they had originally owed.

The commissioner, said the company, had not informed it that an amnesty was planned. This was in violation of the company's right to the doctrine of legitimate expectations. This doctrine was not protected by the European convention nor by the constitution, but was a principle developed by the court of the European Union. Every individual was entitled to be aware of how the administration of his country was to be expected to decide on issues affecting him.

Woodline Ltd concluded its constitutional application by claiming that its fundamental human rights had been violated. The company requested the court to provide it with a remedy, including the refund of the difference between the sum it had paid and that which it would have paid had the scheme been made applicable to it.

The application was signed by Dr José Herrera, Dr Edward Zammit Lewis and Dr Shazoo Ghaznavi.