Barbara Gayle, Staff Reporter
THE Stamp Commissioner is challenging a ruling by the Revenue Court in November last year that it must return with interest the $110 million it collected from the Carreras Group Ltd. in transfer tax arising from a share transfer.
In the grounds of appeal filed, the Stamp Commissioner is asking the Court of Appeal to find that the Revenue Court Judge errred "in failing to consider the evidence which was before him and to hold that the transaction was really a sale of shares disguised to look like a re-organisation and not a simple exchange of shares for a debenture."
The dispute between Carreras and the Stamp Commissioner arose in 1999 when Carreras transferred its shares in the Jamaica Biscuit Company to Caribbean Brands Ltd. for a gain of $705 million. Carreras was charged transfer tax of $110 million.
Carreras claimed that it was not entitled to pay the transfer tax and appealed to the Revenue Court.
On November 14, last year, Justice Roy Anderson upheld submissions from Carreras' lawyers and ruled that its appeal from the decision of the Stamp Commissioner made on October 21, 1999, was allowed.
The judge ordered that the charge to transfer tax imposed by section 3 of the Transfer Tax Act on the transfer by Carreras of all its shares in Jamaica Biscuit Company to Caribbean Brands Ltd. has been by virtue of the exemption contained in paragraphs 4 and 6 of the First Schedule of the Transfer Tax Act. He also ordered the Stamp Commissioner to repay with interest the $110 million.
Michael Hylton, Q.C., Solicitor-General who is representing the Stamp Commissioner, has filed four grounds of appeal in which it is being contended that the judge erred in his decision.
The grounds of appeal are that the judge erred in law in failing to hold that the court is entitled to ascertain the true nature of the transaction and is not bound to accept that a transaction is what it purports to be.
The Stamp Commissioner is also contending that the judge erred in failing to hold that where there are a series of transactions with a pre-ordained purpose, and one or more of the transactions in the series has no legitimate commercial purpose, the courts will not treat the series as constituting a genuine transaction such as would avoid liability to taxation which would otherwise be payable.
Another ground of appeal is that the judge erred in law in failing to hold that after a re-organisation or reconstruction, such as would result in an exemption from transfer tax, the company would still be owned and controlled by the same persons, although the nature of their holding may change.
"The learned judge erred in law in failing to have regard to the question as to whether the exchange of shares for debentures in this case was for the achievement of a legitimate commercial purpose," the Stamp Commissioner is asking the court to find.
The court is also being asked to rule that the judge erred in failing to consider the evidence which was before him, and to hold that the transaction was really a sale of shares disguised to look like a re-organisation and not a simple exchange of shares for a debenture.
