IRD has issued a case summary of Jayashree Limited v Commissioner of Inland Revenue. In this case, the director of Jayashree Ltd filed an appeal in high court against a district court decision. He also filed an application to represent Jayashree Ltd at the hearing of the appeal.
The issue
In this case the plaintiff filed a case against an accounting firm and the commissioner of IRD, to seek $50,000 from them for “stress caused by habitually wrong scrutiny.
The Decision
The high court dismissed the application for the director to represent Jayashree Ltd abiding to the Mannix rule that a company can only be represented by a barrister or solicitor of the High Court. The high court also struck out the appeal on procedural grounds.
The court took into consideration the directors’ actions and disregard for court procedure. He previously attempted to act for Jayashree without the leave of the Court and had been told many times by both the High Court and the Court of Appeal that a company requires legal representation before the High Court and the Court of Appeal. The High Court observed that the director was clearly aware of the Mannix rule but chose to ignore it rather than comply with it.
The Claim included the following allegations which Mr Karmarkar repeats in the Application. (a) Mr Karmarkar is responsible for filing GST returns for all the companies he identifies of which he was director, including Jayashree, since their inception.
(b) Mr Karmarkar diligently filed GST returns on time as per the treatment of GST for residential rental income and expenses based on the advice given by QBSL.
(c) All the GST returns were scrutinised by Inland Revenue twice in the years 2010/2011 and 2018/2019.
(d) Suddenly Inland Revenue advised Mr Karmarkar that he could no longer treat residential rental income and expenses for GST accounting.
(e) Mr Karmarkar felt “humiliated, inconvenienced and like a criminal and was stressed beyond imagination”.
(f) Mr Karmarkar “felt cheated and was aghast that all his sincere efforts to file proper GST on time were completely lost, because of erroneous advice of Quality Business Solutions Limited and habitually erroneous scrutiny by IRD of New Zealand”.
The Commissioner filed an interlocutory application seeking an order striking out the Claim on the grounds that the Claim disclosed no reasonably arguable cause of action against the Commissioner. One of the grounds was that Mr Karmarkar was not the correct plaintiff; Jayashree was the correct plaintiff.
At [9] After the Claim was filed the Commissioner issued a notice of proposed adjustment to Jayashree, initiating the disputes procedure under Part 4A of the Tax Administration Act 1994 (TAA). Following this, Jayashree issued a notice of response.
Additionally, the Court considered that professional objectivity was absent in the case. The director appeared to be aligning his interests with Jayashree’s interests and did not consider Jayashree as a separate legal entity. The High Court also considered that there was a lack of understanding of the law and the relevant legal issues on Mr Karmarkar’s Tax Information Bulletin part as the primary relief sought in the application could not be given.
Overall, the application was dismissed and struck out on procedural grounds.
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