Judgment summary
Unilever Ghana Limited (the Appellant) appealed against a tax assessment made by the Commissioner-General, Ghana Revenue Authority (the Respondent) on 21st February, 2019. The assessment, per exhibit 5, related to Transfer Pricing Returns and Financial Statements submitted for the 2012-2016 years of assessment and fixed a tax liability of Six Million, Two Hundred and Thirty-Six Thousand, Two Hundred Cedis (GH¢6,236,200.00).
The Appellant objected to the assessment and, after an objection decision was issued by the Respondent, filed an appeal before the High Court on 17th March, 2021.
The Court, presided over by Francis Obiri J, examined the statutory timelines for objections and appeals under the Revenue Administration Act, 2016 (Act 915) and Order 54 of C.I. 47. It found that the Appellant's application for extension of time to appeal, and the subsequent leave granted by the Court (differently constituted) on 15th February, 2021, fell outside the four-month period allowed by law.
The Court held that the order granting leave to appeal out of time was void, set it aside, and dismissed the appeal on the ground that the Appellant had not properly invoked the jurisdiction of the Court. The Respondent's objection decision dated 19th September, 2019 was held to continue to stand.
Background
On 17th March 2021, Unilever Ghana Limited filed an appeal against the Commissioner-General, Ghana Revenue Authority before the High Court.
The appeal concerned a Tax Assessment made by the Respondent against the Appellant on 21st February, 2019, attached as exhibit 5 to the Notice of Appeal. Per exhibit 5, the Appellant's tax liability per its Transfer Pricing Returns and Financial Statements submitted for 2012-2016 years of assessment was Six Million, Two Hundred and Thirty-Six Thousand, Two Hundred Cedis (GH¢6,236,200.00). The Appellant was required to pay the amount within fourteen days from 21st February, 2019.
The Appellant objected to the assessment by a letter dated 20th May, 2019 (exhibit 6). The Respondent's opinion on the objection is dated 19th September, 2019 (exhibit 7). Subsequent letters were exchanged between the parties regarding the Appellant's tax liability.
Being dissatisfied with the objection decision, the Appellant filed the appeal before the Court. The Respondent filed a response to the Notice of Appeal on 12th April, 2021, and the parties subsequently filed their submissions for determination of the appeal.
Core dispute
The Appellant's grounds of appeal were: (a) that the Respondent did not use a transfer pricing method as required by the Transfer Pricing Regulations, 2012 (LI 2188) in examining the Appellant's Transfer Pricing Returns; (b) that the Respondent misinterpreted, misunderstood and misapplied the OECD Transfer Pricing guidelines to arrive at a liability of GH¢6,236,200.00 on Advertising, Marketing and Promotion expenses incurred by the Appellant; and (c) that had the Respondent properly applied the OECD guidelines, the Appellant would not have been liable to pay tax on the Advertising, Marketing and Promotion expenses.
Before addressing these grounds, the Court raised, on its own initiative, the preliminary issue of whether it had jurisdiction to entertain the appeal, given the statutory time limits for objections and appeals under the Revenue Administration Act, 2016 (Act 915) and Order 54 of C.I. 47.
Court findings
The Court held that appeals are statutorily conferred and not derived from common law, so in the absence of statutory jurisdiction, no appeal can legally exist before an appellate court. It stated that jurisdiction is a fundamental issue that can be raised at any time, even suo motu.
The Court set out the statutory scheme under Act 915: a person served with a Tax Decision under section 41 has a right to object under section 42 within thirty days, or upon extension by the Commissioner-General under section 42(3) and (4). Under section 43(2), the Commissioner-General must give a decision on the objection with reasons within sixty days of receipt. Under section 43(5), a notice served on a person in respect of an objection is conclusive evidence that a decision has been made and is correct. The Court noted that Act 915 provides for objection to be made only once under section 42, and that there is no power of review of an objection decision.
A right of appeal against the Commissioner-General's objection decision arises under section 44 of Act 915 and Order 54 of C.I. 47. Section 44 provides that a person dissatisfied with the Commissioner-General's decision may appeal to the Court within thirty days of the decision. Order 54 Rule 2(1) requires the appeal to be commenced by filing five copies of the notice of appeal within thirty days of receipt of the decision. Order 54 Rule 2(2) allows an aggrieved person who fails to file within thirty days to apply for extension of time within three months from the expiry of that thirty-day period, if the delay was due to absence from the country, sickness or other reasonable cause. Order 54 Rule 2(3) provides that no application for extension of time shall be entertained after the expiry of the three months. The combined effect is that an objector has, in total, four months to file an appeal.
Applying these provisions to the facts, the Court found that the tax decision was made on 21st February, 2019 (exhibit 5) and received by the Appellant on 8th May, 2019 (exhibit 6). The objection was made on 20th May, 2019 (exhibit 6). The objection decision, with reasons, was made on 19th September, 2019 (exhibit 7), disallowing the objection and confirming the tax liability of GH¢6,236,200.00 on advertising, marketing and promotion expenses. The Appellant's documents did not show when it received the objection decision, but its letter dated 23rd October, 2019 (exhibit E to the Respondent's reply) referred to the objection decision, indicating receipt on or before that date.
By calculation, the four-month period for appeal expired on or before 24th February, 2020. However, the Appellant filed its motion on notice for extension of time to appeal on 27th June, 2020, which was beyond the statutory period under both Act 915 and C.I. 47. The Court (differently constituted) had nonetheless granted the Appellant leave to file its notice of appeal on 15th February, 2021.
The Court held that this earlier order granting leave was made against the statutory provisions of Act 915 and C.I. 47 and was therefore null and void. It held that courts cannot insert or remove words from legislation to reach a desirable conclusion, and that time limits set by statute must be strictly complied with. The Court found that it had no power to craft a new rule to aid the Appellant, who was out of time before bringing the application for extension of time to appeal.
Outcome
The Court held that the order granting the Appellant leave to appeal, made on 15th February, 2021, was void and set it aside. Since the Appellant's appeal was predicated on that void order, the appeal did not properly invoke the jurisdiction of the Court for the merits to be considered.
The appeal filed on 17th March, 2021 was dismissed on the ground that the order granting leave to appeal against the objection decision was void. The Respondent's objection decision dated 19th September, 2019 was held to continue to stand.
Tp method highlighted
The judgment records the Appellant's grounds of appeal that the Respondent did not use a transfer pricing method as required by the Transfer Pricing Regulations, 2012 (LI 2188), and misapplied the OECD Transfer Pricing guidelines in assessing tax on Advertising, Marketing and Promotion expenses. However, the Court dismissed the appeal on jurisdictional grounds without considering or determining the merits of the transfer pricing method or the OECD guidelines issue.
Major issues / areas of contention
- Whether the High Court had jurisdiction to entertain the appeal given the statutory time limits for objections and appeals under the Revenue Administration Act, 2016 (Act 915) and Order 54 of C.I. 47.
- Whether the earlier order of the Court, differently constituted, granting the Appellant leave to appeal out of time on 15th February, 2021, was validly made.
- Whether the Respondent used a transfer pricing method as required by the Transfer Pricing Regulations, 2012 (LI 2188) in examining the Appellant's Transfer Pricing Returns (raised as a ground of appeal but not determined on the merits).
- Whether the Respondent misinterpreted, misunderstood and misapplied the OECD Transfer Pricing guidelines in arriving at the tax liability on Advertising, Marketing and Promotion expenses (raised as a ground of appeal but not determined on the merits).