Supreme Court Decision in Lawyer Darboe’s Tax Case

The Supreme Court of The Gambia has on the 28^th January 2020 upheld the decision of the Court of Appeal that Lawyer Ousainou Darboe only paid his taxes for the period concerned to fulfil his political obligations to contest in the Presidential elections.

The Judgment was delivered by Justice M.M. Sey and the other four judges in the persons of Justices Hassan B. Jallow (Chief Justice), G.B. Samega Janneh, R.C. Sock and Cherno Sulayman Jallow all agreed with her judgment.

Darboe’s appeal arose from a decision of the Gambia Court of Appeal delivered on 14^th June 2016 dismissing his appeal against the adverse findings made in relation to him as contained in the report of the Commission of Inquiry into Tax Evasion and other Corrupt Practices in The Gambia from 1999 – 2011.

The Commission was issued by the former President of the Republic of The Gambia, in the exercise of the powers conferred on him by Section 200 of the 1997 Constitution of The Republic of The Gambia and the Commission of Inquiry Act.

The mandate of the Commission was to investigate and inquire into the incidents and dimensions of tax evasion and avoidance in The Gambia; to ascertain the extent of loss of public revenue resulting from evasion and avoidance of capital gains tax; ascertain the extent of loss of Government revenue resulting from evasion and avoidance of sales tax and personal income tax; investigate and determine the role of individuals, groups and professional bodies in the evasion and avoidance of taxes; investigate and inquire into professional malpractices by members of the public as it relates to obtaining of goods through widespread issuance of false or dud cheques; ascertain the extent to which tax evasion, issuance of false and dud cheques and other malpractices by the members of the professional bodies, has affected foreign direct investment in The Gambia; carry out an overview of the various tax laws with a view to identifying shortcomings and recommend necessary amendments; and prescribe the framework for the facilitation of the setting up of an independent Corrupt Practices Commission.

The Commission submitted its report to former President Yahya A.J.J. Jammeh, upon conclusion of its inquiries on 27^th April 2012.

The Commission finding against Lawyer Darboe was “In effect his taxes were only paid during election period to ensure his participation in the process. When a reassessment of his taxes was conducted following the review of the evidence he presented to the Commission and his tax file obtained from GRA, he is found to have a total outstanding tax liability of D1,981,296.52.”

Dissatisfied with the findings of the Commission’s findings, Lawyer Darboe appealed against before the Court of Appeal on the 15^th June 2012. The Court of Appeal by its judgment of 14^th June 2016 upheld the adverse findings and dismissed the appeal.

Aggrieved by the Court of Appeal’s decision, Lawyer Darboe appealed against the Court of Appeal’s to the Supreme Court on the 20^th June 2016 on three grounds.

On the first ground, he argued that the Court of Appeal erred in holding that the Commission’s adverse findings are right, consistent and supported by evidence provided by him when the evidence is to the contrary. On the particulars of error, Darboe said Court of Appeal failed to give any effect to the various tax clearance certificates issued to the Appellant by the Commissioner of Income Tax certifying that he has satisfied the relevant authority concerning the payment of all taxes.

On the second ground of the appeal, Lawyer Darboe contended that the Court of Appeal erred when it held that the Notices dated 6^th June 2012 constitutes enough notice and reasons for the adverse findings as prescribed under the said section of the Constitution. On the particulars of error, Darboe said the Notice failed to contain the vital information of how the Commission arrived at the alleged outstanding figure of D1,981,296.52. He reiterated that he was not confronted with the evidence received and acted on by the Commission of Inquiry after the proceedings.

On the third ground of the appeal, Darboe maintained that the judgment is against the weight of the evidence.

The Solicitor General represented the Attorney General on the 13^th March 2019 told the Supreme Court that they found themselves unable to defend a clear departure by the Commission from its terms of reference or the jurisdiction conferred on it by the Legal Notice. The Solicitor General conceded to the issue of jurisdiction as it relates to the re-assessment purportedly carried out by the Commission; that the re-assessment went outside the bounds of the Commission and that it is not clear from the records as to what scheme was used under the Legal Notice.

On the 26^th November 2018, Lawyer Darboe filed four additional grounds of appeal dated the 22^nd November 2018.

Lawyer Darboe argued that the Court of Appeal failed to hold that the delay in the payment of taxes is not the same as tax avoidance or tax evasion, and as a result, wrongly upheld the findings of the Commission. On the particulars of error, he said no effect was given to the tax clearance certificate issued and no authority was given to the Commission to go behind the said clearance certificate; and the Court of Appeal ignored the unchallenged evidence adduced by him.

Secondly, he maintained that the Court of Appeal erred when it acted on information that was not adduced in evidence and which he was never recalled and confronted with. He said the assessment made by the Commission was not based on any evidence or the fact before it.

Thirdly, he argued that the Court of Appeal erred when it upheld the Commission’s findings which reassessed him when there was no evidence that any of the circumstances within the contemplation of section 84 of the Income and Sales Tax Act exists or had arisen. On the particulars of error, Darboe said the power to reassess taxes is vested in the Commissioner General and the Commission was not empowered to assume the functions of the Commissioner-General. He added that there is no presumption that an inferior tribunal can exercise jurisdiction not expressly conferred on it. He argued that some of the tax years for which the reassessment was done fall outside the 6 year period. He said there was no evidence of fraud by him and none was remotely suggested when he appeared before the Commission.

Finally, he argued that the Court of Appeal failed to properly scrutinize the documentary evidence before it and as a result wrongly concluded that the Commission’s findings were consistent and supported by the evidence provided by him. On the particulars of error, he said the receipts presented by him to the Commission and which were not contested, show that the receipts issued covered payment for all the years in issue though not separately. He added that the Commission wrongly based its findings on him standing at the Bar when there was no evidence before it that legal practitioners in his category have charged and earned the same fees and that fees payable to a legal practitioner is dependent on his age at the Bar. He said the Commission’s findings are not supported by evidence.

Lawyer Darboe sought from the Supreme Court to set aside the judgment of the Court of Appeal and to enter judgment for him thus setting aside the adverse findings of the Commission of Inquiry against him.

Darboe’s lawyer, Neneh M.C. Cham identified three issues for determination by the Supreme Court. 

On the first issue, she wanted the apex court to decide whether the Court of Appeal was right to hold that Legal Notice Number 27 (which established the Commission) did confer the needed authority and jurisdiction on the Commission to assess and re-assess Darboe’s taxes.  She submitted that when the Commission re-assessed Darboe’s taxes, it clearly acted beyond its authority and jurisdiction and that the authority to assess and reassess Darboe’s taxes rests solely with the Commissioner-General. She further submitted that the power to re-assess a person for any tax or amount due is vested in the Director-General under section 23 of the National Sales Tax Act. Ms. Cham submitted that the Income Tax Act 1949 vests the power to assess taxes solely in the Commissioner of Income Tax. She maintained that the Commission had quasi-judicial powers and, therefore, like a court of law, if acts in excess of its jurisdiction, its actions must be set aside.

Justice M.M. Sey said it is beyond disputation that the Director-General and the Commissioner-General are vested with powers to assess or re-assess by virtue of section 23 (1) of the National Sales Tax Act and by section 64 (1) of the Income Tax Act 1949.

Section 23 (1) of the National Sales act provides: “the Director-General may in respect of any matter assess a person for any tax, penalty, interest or other sum payable by that person under this Act and may, notwithstanding any previous assessment, covering in whole or in part, the same matter, make such additional assessment as the circumstances require.”

Section 64 (1) of the Income Tax Act states: “If the Commissioner discovers or is of the opinion at any time that any person liable to tax has not been assessed or has been assessed at a less amount than that which ought to have been charged, or has been allowed excessive reliefs, the Commissioner may within the year of assessment or within six years after the expiration thereof and as often as necessary, assess such person at such amount or additional amount, as according to his judgment ought to have been charged, and the provisions of this Act, as to notice of assessment, appeal and other proceedings under this Act shall apply to such assessment, or additional assessment and to the tax charged.”

Justice Sey said section 84 of the Income and Sales Tax Act 2004, as amended, gives the Commissioner General the power to amend income tax assessments. She dismissed Ms. Cham’s argument that the Commission lacked the power to assess and re-assess Darboe’s tax. 

The Judge said the Commissioner had the power to assess and re-assess pursuant to the Legal Notice and section 200 of the Constitution. She said for the Commission to ascertain the extent of loss of public revenue resulting from evasion and avoidance of taxes, the Commission, impliedly, had to assess and re-assess Darboe’s tax liabilities within the context of the Legal Notice, notwithstanding the powers granted to the Commissioner-General under the Income and Sales Tax Act 2004. She said the Income and Sales Tax Act has repealed the National Sales Act and Income Tax Act of 1949.

She said the source of the authority (or power) of the Commission to re-assess the tax liability of Darboe is derived from the Legal Notice and not necessarily under section 84 (1) and 162 (5) of the Income and Sales Tax Act or, as the case may be, the cited or referred corresponding sections of the relevant repealed Acts.

“The Constitution, 1997, by section 200 and Legal Notice Number 27 of 2011 implicitly but clearly empowered the Commission to apply the regulations, rules, rates, charges, penalties etc available under the Income and Sales Tax Act that are necessary for determining the correct tax liability or debt of the Appellant (Darboe),” she held.

On the second issue for determination, she wanted the judges to determine whether the Court of Appeal was right when it held that the Legal Notice constitutes enough notice and sufficient reasons as per the adverse findings of the Commission. She submitted that the Court of Appeal was wrong when it held that the Notice dated 6^th June 2012, constituted enough notice and reasons for the adverse findings given by the Commission. She argued that the adverse findings of the Commission of Inquiry in respect to Lawyer Darboe was invalid in the light of its failure to comply with section 204 (1) of the Constitution.

Section 204 (1) states “where a Commission of Inquiry makes an adverse finding against any person, it shall, at the time of submitting its report to the President, inform such person of the finding and the reasons therefor.”

Ms. Cham argued that the provision of section 204 (1) clearly make it a mandatory requirement for the Commission to give reason or reasons for arriving at its findings and, furthermore, that the Commission completely failed to give details of how it arrived at its adverse findings in violation of the Constitutional provision, particularly the figure it alleged was outstanding from Darboe. The omission, Counsel submitted, is a ground to nullify the said adverse findings.

Justice Sey held the Notice dated 6^th June 2012 from the Commission addressed to Lawyer Darboe signed by the Chairperson of the Tax Commission Honourable Justice Singhateh constituted enough notice as per the adverse findings of the Commission.

She said the content of the Notice addressed to Darboe: “Take Notice that pursuant to section 204 of the Constitution of the Republic of The Gambia 1997, you are hereby given notice of the adverse findings made against you by the Commission of Inquiry into Tax Evasion and Other Corrupt Practices in The Gambia from 1999-2011 established by legal instrument contained in Legal Notice No. 27 of 2011.”

In addition to the said Notice, Justice Sey said the Chairperson of the Commission signed and addressed a document to Ousainou Darboe, summarising the evidence and findings against him.

In that document, the Commission found that Darboe paid his income tax on the 3^rd and 17^th September 2001 for preceding years totalling D543,597 and was issued with an income tax clearance certificate on the 17^th September 2001 for the purpose of nomination. Also, on the 17^th July, 7^th August, 21st and 23^rd August 2006, he again paid his income taxes for the preceding years of 2002, 2003, 2004, 2005 and 2006 totalling to D329,179. He paid sales tax on the 25^th August 2006 for the years 2002, 2003, 2004, 2005 and 2006 totalling to D152,700 and was issued with a tax clearance on the 24^th August 2006 for the September Presidential election. On the 8^th November 2011, he paid sales tax for the year 2011 in the amount of D11,250 and on the 4^th November 2011 paid sales tax again in the amount of D161,176 totalling D172,426.44.

In effect, his taxes were only paid during election period to ensure his participation in the process. When a re-assessment of his taxes were conducted following the review of the evidence, he presented to the Commission and his ta file obtained from GRA he was found to have a total outstanding tax liability of D1,981,296.52.

Darboe claimed before the Commission that he was paying his taxes up to date and he claimed that he has only one employee his secretary who is a volunteer. He also tendered copies of his receipts for income tax and sales tax.

The Commission found out that Rechard (sic) Mendy and Neneh Cham are legal practitioners who by their evidence before the Commission worked under Lawyer Darboe at various times. The Commission held that there is no evidence that he paid the PAYE taxes and the Commission was not convinced by their evidence related thereto. On the third and finally issue, Counsel Cham wanted the court to determine whether Commission’s findings, as found by the Court of Appeal, were right, consistent and supported by the evidence.

After analysing the evidence adduced by Lawyer Darboe before the Commission, the Court of Appeal held that Darboe defaulted in meeting his tax obligations as required under the various tax laws and he was thereby liable to pay penalties and interests due to late payments.

Ms. Cham for Darboe submitted before the Supreme Court that the Court of Appeal failed to appreciate the distinction between tax delay and tax avoidance. She further submitted Darboe in his evidence had told the Commission that he paid his taxes albeit sometimes late when he had a penalty imposed which he paid. She contended that this piece of evidence remains uncontroverted and ought to be accepted by the Supreme Court as there is absolutely no evidence of tax avoidance on his part.

“Having carefully considered the findings of the Court of Appeal, this Court is not impressed with the learned Counsel’s (Cham’s) submission on the distinction, as she urged this Court to consider, between “tax delay” and “tax avoidance”,” Justice Sey said.

She said, the evidence clearly showed that Darboe only paid his taxes for the period concerned to fulfil his political obligations to contest in the Presidential elections.

“Whatever the term used, it is well established that the Appellant (Lawyer Ousainou Darboe) owed arrears of tax which he had failed to pay,” Justice M.M. Sey held.

 

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