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CCJ orders GST Commissioner to refund taxes collected from Cruise Solution and Discovery Expeditions

BELIZE CITY, Tues. Oct. 16, 2018– The Caribbean Court of Justice (CCJ) issued a ruling on Friday, October 12, in regards to the appeal of Cruise Solutions and Discovery Expeditions, two tour companies owned by businessman David Gegg, who has been engaged in a protracted legal battle with the Commissioner of General Sales Tax (GST).

The court ordered the GST Commissioner to refund the taxes it collected from the two companies because under the GST Act, the companies were zero-rated. The CCJ ruling overturned a Court of Appeal decision which ruled in June 2016 that the companies were not zero-rated and must pay the GST.

Government will now have to fork out more than $400,000 it had collected since 2007 from the two companies plus simple interest of six percent.

The CCJ decision brings to an end years of litigation between Gegg and the GST Commissioner, who had issued a warrant for Gegg’s arrest for his unpaid GST, in 2012.

Gegg was able to work out a payment plan with the GST Department and so avoided further entanglements with the law.

After working out a payment plan in 2012, however, Gegg brought a claim against the GST Commissioner contending that the service that his companies performed qualified under the GST Act as zero rated, and were not subjected to the 12.5 percent GST.

At the Supreme Court, Justice Sonya Young did not agree with Gegg’s claim and ruled in favor of the GST Commissioner, in 2014.

Gegg appealed the Supreme Court decision to the Court of Appeal, but ran into another judicial roadblock when the Court of Appeal upheld the Supreme Court decision that he was bound to pay the taxes.

Gegg was not deterred by the rulings of the two local courts, and appealed his claim to the CCJ, which has final appellate jurisdiction.

In its ruling, the CCJ essentially agreed with Gegg that the two companies which provided tour operator services were not legally obligated to pay the GST.

The press release issued by the court did not state how many judges sat on the panel.

CCJ Justice David Hayton, in delivering the judgment, said, “The appeal is allowed, and the order of the Court of Appeal set aside. It is declared that by virtue of paragraph one items six, two and/or seven of the Second Schedule to the General Sales Tax Act, the tour services provided by the Appellants directly to international cruise lines (such as Royal Caribbean and Norwegian Cruise Lines) for passengers visiting Belize under contracts with such lines, constitute zero-rated supplies for the purposes of the above Act. It is declared that the Respondents have unlawfully assessed, charged and collected from the Appellants General Sales Tax on the supply of tour services directly to international cruise lines visiting Belize under contracts with such lines.

“It is ordered that an account be taken of all General Sales Tax unlawfully assessed, charged and collected from the Appellants in respect of the above tour services since six years prior to filing of the claim form on 14 February 2013. It is ordered that the Appellants are repaid the amount due each Appellant on the taking of the above account, plus interest thereon at the rate of six percent simple interest per annum.”

In a media release that it issued on Friday, the CCJ stated…”Cruise Solutions Ltd. and Discovery Expeditions Ltd. are Belize tour operators that entered into contracts with international cruise lines that visit Belize to provide tours for their passengers. Previously, the cruise lines would have contracted with their passengers to supply the service of arranging tours for them with local tour operators.

“Passengers were not charged the GST for this service as part of their package holiday since it was considered part of the supply of the ‘international transport’ of the passengers and therefore exempt under the GST Act. Under the Belize General Sales Tax Act, ‘a supply of services that are provided directly in connection with the operation or management of a ship or aircraft engaged in international transport’ is zero-rated for GST purposes.

“As a result, the cruise lines did not pay GST to the tour operators, alleging that the tour operators’ services of supplying tours were zero-rated, taking account of the fact that the cruise lines had not collected any GST from their passengers against which they could offset any GST payable by them. They believed themselves intended to fall outside the net of GST. However, the GST Commissioner insisted that GST was chargeable and the tour operators had to pay this charge. …

“Both tour operators filed a claim in the High Court of Belize seeking a declaration that their services were zero-rated. They also argued that they had been unlawfully charged GST and should be refunded all monies paid to the relevant tax authority with interest. However, they received an unfavorable ruling in the High Court and the Court of Appeal…”

Cruise Solution and Discovery Expeditions were represented at the Supreme Court and Court of Appeal by attorney Andrew Marshalleck, S.C., and attorney Eamon Courtenay, S.C. argued the appeal at the CCJ level.

Solicitor General Nigel Hawke represented the GST Commissioner and the Attorney General.

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