BIR settles $34M lawsuit with pipeline company

THE Board of Inland Revenue (BIR) yesterday settled a $34 million lawsuit in favour of an oil and gas company in South Trinidad which had sued the BIR for seeking to re-audit the company’s financial accounts for 1998 twice. The BIR also agreed to pay damages and legal costs to API Pipeline, a Fyzabad-based company engaged in laying cross-country pipelines from Amoco in Point Galeota to the Atlantic LNG plant in Point Fortin. On May 24, API was granted leave to apply for judicial review of the BIR’s decision to re-audit the company’s accounts. In documents filed in the Sub-Registry, San Fernando, API’s management claimed that the company’s pipe laying operations faced the risk of closure if the re-audit was allowed.

API contended that during that audit, the BIR obtained a garnishee order to hold $16.9 million belonging to API pending the outcome of the audit. Last April 6, API received a notice from the BIR that in accordance with Section 117 of the Income Tax Act, an audit for the income year 1998 was to be conducted. The BIR asked API to provide records of deductions and remittance of PAYE for $353,259.01 and $271,435.28, respectively. API sued against the BIR’s claim of the sum and in 1999, Justice Sebastien Ventour ruled that the BIR followed proper procedures in conducting a proper audit. 

The judge’s findings paved the way for the API lawsuit when the BIR sought to re-audit on the basis that its first audit was not properly conducted. The $16.9 million is still being held on a garnishee order which generated interest now totaling $34 million. When hearing of the lawsuit came up yesterday before Justice Carlton Best in the San Fernando High Court, Nassim Mohammed, BIR’s acting chief State Counsel, appeared for the BIR. Khemraj Harrikisson, attorney for API, told Justice Best a consent had been reached between the parties. Mohammed agreed to the judge’s order that the decision of the BIR to re-audit was illegal, null and void. An order prohibiting and an injunction restraining BIR from re-auditing was also granted. Justice Best, on agreement of the parties, agreed that damages and API’s legal cost be paid by the BIR.