MOVELLE COMPANY LTD VRS GHANA REVENUE AUTHORITY (Initial High Court Ruling).

Citation: suit number CM/RPC/0499/2020 dated 25 October 2021

Brief Facts:
Movelle Company Ltd (the Plaintiff), is an importer and trader of frozen meat and meat products. The Plaintiff imported 1,750 metric tons of frozen chicken and chicken parts, loaded in reefer container and the goods arrived at the Tema and Takoradi ports. The Government of Ghana introduced a policy requiring permits for all poultry imports to safeguard the local poultry industry.
It was the case of the Plaintiff that it arranged with its suppliers to import the products before the government policy was introduced. The Plaintiff subsequently applied for permits after the goods arrived, but before the permit was granted, the Defendant (Ghana Revenue Authority), had auctioned the goods.
The Plaintiff asserted that 41 forty-footer containers were seized and auctioned and claimed that the auction was unlawful. The plaintiff thus sought several reliefs, including a declaration of unlawful seizure, damages, and a refund.
The Defendant, the Ghana Revenue Authority (GRA), however stated that the goods were perishable and were not cleared within the statutory period, justifying the auction. The Defendant further claimed that the Plaintiff failed to apply for a permit in time and the goods were rightfully auctioned.

Issues

The issues set down for trial were:

Whether the seizure and auction of the Plaintiff’s forty-one (41) forty-footer containers of imported frozen chicken and chicken parts was lawful?
Whether the Defendant complied with the mandatory administrative and statutory procedures relating to the seizure and auction of the Plaintiff’s goods?
Whether or not the Plaintiff was entitled to an account of the proceeds from the auction sale of the goods?
Whether the Plaintiff passed the necessary customs and paid the appropriate duties and taxes to have the imported goods cleared within the statutory period.

Area of Tax Law Considered

the legality of the seizure and auction of goods and the proper procedure to follow in accounting for the proceeds
Minor consideration on customs procedures, which are related to taxation on imported goods.

Arguments

Applicant (Taxpayer)

The seizure and auction were unlawful because the Defendant failed to follow proper procedures.
The government’s directives regarding permits were new and that they had made prior arrangements with suppliers to import their goods.
The Plaintiff was working to obtain the necessary permits when the goods were seized. Adequate notice of the auction should be given by the defendant while the permitting processes were ongoing.
They had a proprietary interest in the goods which in their estimated were valued at US$3,894, 750 and were entitled to the proceeds of the sale
Since the goods were in refrigerated containers, they should not have been considered perishable.

Defendant (Ghana Revenue Authority)

The Plaintiff failed to clear the goods within the statutory period and that the goods were perishable.
The goods were lawfully auctioned in accordance with the law. Procedurally, they are not obliged to inform the Plaintiff of the proceeds from the auction but must inform the Commissioner of the balance.
The Plaintiff did not obtain the necessary permits in time.
The Plaintiff failed to apply in writing to the Commissioner for the balance, within the legally permissible time limit.

Ruling

The seizure and auction of the forty-one (41) containers were lawful due to the perishable nature of the goods and the failure of the Plaintiff to clear the goods within the statutory period.
The Defendant did not properly account for the proceeds of the sale and ordered for the account for the proceeds of the auction sale of the 41 containers to be made available within one month from the date of the judgment.
The Defendant was ordered to provide an account of the auction sales, which should include costs in the discharge of duties, expenses of removal and sale, rent and charges due to the Government, freight and other charges. The Defendant was ordered to pay any balance to the Plaintiff, after the above deductions, within three weeks of receipt of the account.
The Plaintiff’s claim that the value of goods in the 41 containers was $3,894,750. This was estimated at a value at $1,442,072.50.

Reasoning

Tax laws must be strictly interpretated.
The court stated that although the seizure and auction were lawful due to the perishable nature of the goods, the Defendant did not provide evidence of the auction or how the proceeds were calculated.
The Defendant had a duty to show that the auction was conducted fairly and in accordance with the law and provide a proper accounting of the proceeds.
Any balance of the proceeds after deductions must be paid to the owner of the goods and not paid into the consolidated fund, unless it was in circumstances of forfeiture.
The were no basis for the claims of damages.

Principles for Tax Practitioners

Goods can be lawfully seized and auctioned for failure to clear them within the statutory period, especially if they are perishable. However, the authority responsible for the auction must account for the proceeds in accordance with the law.
The burden of proof lies with the authority to demonstrate that the auction was conducted lawfully and that the proceeds were properly accounted for.
Even when goods are perishable and can be sold without notice, the owner is still entitled to the balance of the proceeds from the sale, after deducting all legitimate charges.
The court used the Defendant’s own admission of the value of the containers to calculate the total value, when the Defendant could not provide records of the auction sales.

References

Statutory

sections 116, 117, 118, and 288 of the Customs Excise and Preventive Service (Management) Act, 1993 (PNDCL 330)
section 60 of the Evidence Act, NRCD 323.

Caselaw

Cape Brandy Syndicate v IRC [1921] 1 KB 64 at 71
In Re Asere Stool; Nikoi Amontia VI (substituted by) Laryea Ayiku II (2005-2006). SCGLR 637
Multichoice Ghana Ltd v Internal Revenue Service (SCGLR 783)