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Chandulals Pharmacy Ltd v CEO Fiji Revenue & Customs Authority [2015] FJHC 320; HBT15.2013 (1 May 2015)

IN THE TAX COURT OF THE HIGH COURT
AT SUVA

Action No. HBT 15 of 2013

IN THE MATTER
of the Value Added Tax Decree and the Tax Administration Decree No. 50 of 2009

AND

IN THE MATTER of Section 91
of the Tax Administration Decree 2009 (Decree 50 of 2009)

AND

IN THE MATTER of CHANDULAL'S PHARMACY LIMITED
(Tax Identification Number: 50-07941-0-6) of Lautoka, Fiji

BETWEEN:

CHANDULAL'S PHARMACY LIMITED
Applicant

AND:

CHIEF EXECUTIVE OFFICER,
Fiji Revenue and Customs Authority
Respondent

Appearance : Mr B C Patel with Mr Viren Kapadia of Sherani & Co. Barristers and Soliciors for the Applicant
Ms F Gavidi Counsel for the Respondent

Date of Judgment : 1 May 2015

JUDGMENT

[1] The Notice of Motion was filed by the Applicant on 9 December 2013 supported by the affidavit sworn by the Company Secretary of the Applicant dated 9 December 2013 and sought an order from this court that the Applicant be granted leave to appeal against the decision of the Tax Tribunal dated 2 December 2013. When the matter was taken up by this court on 6 January 2014, the Respondent's counsel consented to grant the leave to appeal and accordingly this court granted the order for leave to appeal and the substantive appeal was scheduled to take up on 14 March 2014 which was subsequently adjourned to 8 April 2014.

[2] The appeal was made on the basis that the Tax Tribunal refused transfer the matter to this court although the both parties agreed to transfer the case to be heard before the Tax Court. The Respondent's counsel consented to the appeal and this court found there was no reason for the Tax Tribunal to decline the application and the appeal was allowed and the matter was fixed for hearing on 6 June 2014.

[3] The present application before this court is the same application for Review of Objection Decision filed in the Tax Tribunal on 19 November 2012. The Applicant claims to set aside or vary the Objection Decision of the Respondent's dated 26th October 2012 assessing a Total VAT Liability and Penalties amounting to $976,470.83.

[4] When the matter was taken up for hearing, the following witnesses were testified:

(i) Rajendra Kumar Chandulal Patel – Managing Director of the Applicant Company

(ii) Jone Talemaimaleya the Auditor of the Respondent.

[5] Applicant's witness explained the procedures and systems adopted in the business to appraise the court. The witness also tendered the Applicant's documents in his evidence. The Respondent's witness explained the procedures followed in his audit and explained how he arrived at the decision on the VAT imposed on the Applicant Company. The both witnesses evidence mainly based on the documents filed in this case and I have taken their evidence to make the conclusions in this matter.

[6] The Tax Decision by the Respondent was made on an audit carried out by the Respondent on the Applicant's business. The parties to this matter are described hereinafter as follows for easy reference:

(i) The Applicant Chandulal's Pharmacy Ltd (CPL);

(ii) ABC Limited (ABC);

(iii) Arrow Target Enterprises Ltd (ARROW);

(iv) The Respondent (FRCA).

[7] FRCA'S Tax decision was based when the CPL claimed VAT refunds. The refunds were claimed on the basis that the input tax on the goods imported by CPL to Fiji were to satisfy the orders of Arrow and ABC, both the companies incorporated and registered in Vanuatu. CPL claims that they got the orders from Arrow and ABC to pack, label and export the goods by post to the customers of Arrow and ABC and the exports were to be zero rated for VAT (Value Added Tax).

[8] It was claimed by the Applicant that between 2008 and 2012, CPL exported goods to Arrow and ABC to the total value of $7,216,457.38 and on the said exports, FRCA assessed VAT of $813,725.74 and imposed a penalty of 20% totaling to $976,470.83. As at May 2014 the Applicant had paid $781,307.99 and since 19 July 2012 FRCA has imposed further penalties of $145,026,56 (Applicant's Bundle of Documents Tab 7 tendered as A3 through witness under the heading VAT Audit payment details analysis).

[9] In this matter the Applicant has to prove that it was the exporter of the goods and the FRCA's decision was wrong.

[10] The agreed issues to be determined by this court are:

(a) Were the Applicant's supplies of pharmaceutical goods by postal services to its overseas purchasers zero-rated sales under second schedule to the VAT Decree; and

(b) Did Arrow and ABC both incorporated and registered in Vanuatu have taxable activity establishment in Fiji for VAT purposes?

The above two issues were raised in the Amended Agreed Statement facts dated 26 November 2013.

[11] Evidence, Analysis, Submissions and Determination

11.1 The witness for the Applicant (CPL) gave evidence and first part of his evidence was summarized and considered as follows:

(a) Since 1995 Applicant (CPL) held the Retail and Wholesale Pharmacy License pursuant to the Pharmacy and Poisons Act of Fiji and the Wholesales License provided CPL to export pharmaceutical products and registered for VAT since 1992;

(b) In the year 2000 there were several websites developed by the Pharmaceutical Website operators to cater for the needs of the customers who needed pharmaceutical goods at a cheaper price. The witness explained how this became a profitable business for the website operators and the fulfillment centers. The website operator companies will get their order from these customers worldwide and such orders are executed by the various fulfillment centers worldwide where the website operators had the arrangements. The market for this business was established on the basis that linking with various fulfillment centers in different parts of the world by engaging them to source cheaper pharmaceutical products to satisfy the needs of the customers of the website operators (competitive price was given against prices of multinational pharmaceutical companies operating on targeted countries). The website operators send the orders received by them from their customers to the fulfillment centers to procure, pack and ship the goods to the customers of the website operators. The orders are accepted by the website operators and the goods were directly sent to the customers by the fulfillment centers.

(c) Having explained the above general procedure the witness stated how the Applicant carried out its operation as a fulfillment center.

(d) In August 2002 one John Andrew of Monarch Holding engaged the services of CPL as a fulfillment center. The agreement was CPL to pre order stock and hold stock until Monarch sent the specific orders to be fulfilled. Monarch also agreed to make an advance payment of $5,000.00 pre-order stock. CPL will have a mark-up of 20% which included packing, labour and postage expenses to be incurred. The business was increased and the advance payment was increased up to $50,000.00 by Monarch. In brief the orders received by the customer's of Monarch to their portal were referred to CPL for execution. The customer gets the goods ordered from CPL however no financial transaction and/or correspondence had taken place between CPL and the customers of the Monarch. CPL only possessed the goods to the customers of Monarch.

Andrew had introduced Nick to CPL as a representative of Monarch, who used to come to Fiji to supervise the functions of CPL with regard to export. Andrew of Monarch also had requested the witness Rajendra Patel for the following personalized services from the CPL:

(1) Separate storage area for pre-ordered for Monarch.

(2) A dedicated staff for Monarch Orders.

(3) A dedicated telephone line for Monarch Orders connected to the internet.

The above request was to avoid any delays of attending to Monarch Orders since at that time CPL was executing the orders on first come first serve basis with other website operators. CPL allocated separate space in their premises without any rent however Monarch agreed to reimburse any extra expenses incurred by way of providing staff and dedicated telephone lines under CPL name. All employees employed during the period were CPL employees and CPL paid their wages and FNPF. Previously orders were made by Monarch by email and after fixing internet facility orders were received through the web portal. Later CPL segregated their business operations in to various divisions' retail shop, local wholesale division and the export division, have better control and supervision of the divisions. This was for operational purposes but the accounting for the CPL business was done as a single operation unit.

11.2 The witness further stated the stocks dedicated to Monarch Orders were under the control and supervision of CPL. The export division's activities were fully controlled and supervised by CPL. Monarch only placed the orders. The customers of Monarch had placed their orders with Monarch using their portal and the orders were processed and delivered by CPL. The witness stated CPL never delivered any order for Monarch in Fiji. When the parcels were sent postage was paid by CPL cheque and the receipts were issued to CPL or as CPL requested.

11.3 Nick was the representative and the contact person for Monarch and when CPL ran out on the advance it was communicated to Nick by email. Nick arranges the funds from Monarch which was sent by a Bank Transfer. Nick never paid any monies to CPL and his responsibility was to check on the punctuality of the shipments made by CPL on behalf of Monarch customers.

11.4 In 2005 there was a change in the ownership of Monarch Holdings Limited and its name was changed to Arrow Target Enterprises Limited (Arrow). Andrew introduced Steve as the new principle to deal on Monarch (now Arrow). Business continued as it is and Nick continued to function as the representative for Arrow.

11.5 In 2005, Nick introduced CPL to ABC on the same terms as agreed with Monarch (now Arrow) and it continued until October 2011 with both the companies and Arrow stopped doing business with CPL in 2011 and ABC continued with the business with CPL.

11.6 During the Audit carried out by FRCA on CPL, it confirmed all the CPL posted on behalf of Arrow and ABC to their customers which had gone out of Fiji by post.

11.7 The witness stated Arrow and ABC were not registered and licensed in Fiji as such they could not sell the pharmaceutical goods in Fiji or they cannot do any export business from Fiji. The witness stated Nick was not a representative based in Fiji and he was visiting Fiji as a representative and to see his girl friend in Lautoka. Nick visited CPL only for the purpose of checking whether the dispatch of the exports was carried out smoothly. All instructions were given by the witness. Nick also checked whether there was advance funds and if there were returns of goods to get the addresses from the Arrow and ABC to forward new addresses for redelivery.

11.8 The witness further stated separate ledgers were maintained for each division i.e. retail, wholesale and fulfillment centre but accounts of the company was maintained as one entity.

11.9 During the cross examination counsel for FRCA tried to establish that Arrow and ABC were having full scale business operation in Fiji and CPL was agent of Arrow and ABC. The witness was very firm in his answers and the counsel for FRCA could not challenge his evidence on the issue of employees were being paid by Arrow and ABC, which was not established. The evidence which established that CPL was engaged to outsource the export orders by Arrow and ABC to cater for their customers out of Fiji. The payments made to the employees were reimbursed by Arrow and ABC to CPL. The staff engaged to carry out export orders were the employees of CPL. There was no admission by the witness Nick was full time based in Fiji for the operation of Arrow and ABC in Fiji.

[12] Now it is my task to analyze the evidence of the Respondent FRCA's witness Jone Talemaimaleya who stated:

12.1 The witness stated he carried out the audit on CPL on behalf of the Respondent. According to the witness there was separate storage space for Arrow and ABC with staff and stocks of medicines etc and he came to the conclusion that ABC and Arrow are directly involved in the export business. However, this position cannot be accepted by this court since Arrow and ABC are not registered companies holding pharmaceutical license in Fiji. This is an agreed fact stated in the Amended Statement of Agreed Facts. In such a situation the witness's evidence that pharmaceutical goods were purchased at the premises of the Applicant locally cannot be taken into consideration. In fact the export was made on instructions of Arrow and ABC.

12.2 The witness stated ABC and Arrow paid for the goods by depositing money into the Bank Account of CPL. This was a commercial business arrangement which was admitted by the witness of the Applicant. The witness admitted in his evidence he did not check whether the payments to the Bank Account of CPL came before or after the orders are processed and posted. In such a situation the Applicant's evidence that the deposits were made to secure the sufficient stocks are available for the dispatch to the customers of ABC and Arrow remain unchallenged. Without checking whether the amounts are deducted before the dispatching of orders, the FRCA witness's conclusion that local purchase was made by ABC and Arrow cannot be accepted. The witness stated senders address is given as ABC or Arrow. This was explained by the witness of the Applicant Rajendra Patel. Obviously the Applicant is not a person known to the customer. Customers make orders to either ABC or Arrow on their web portal. I agree with the Applicant that the senders name was given as ABC or Arrow is for the convenience of the customer. The FRCA witness admitted that CPL did not refund the monies to the customer which clearly indicates the Applicant's witness's credibility. The witness of the FRCA could not confirm that how often Nick came to the business premises and failed to inquire from Nick. In absence of such information this court cannot rely only on the evidence of the FRCA witness that he searched at immigration and it was revealed that Nick was a frequent traveler to Fiji. However, no immigration records tendered to the court and witness did not give any dates of visits made by Nick to Fiji. The most important fact is to prove Nick was in the business premises of CPL to execute export orders. There is no substantive evidence in this regard. The witness stated that he could not meet Nick. But the witness had the opportunity to meet the staffs dedicated by CPL to the export division who were engaged with the exports business with Arrow and ABC. The witness recorded statements and made inquiries only from the Director Rajendra Patel. If the FRCA's witness is dissatisfied with Patel's version with regard to Nick's involvement he would have made further inquiries from other staff to make a decision on Nick's involvement. There is no substantive material to decide on Nick was attending to the day to day business of Arrow and ABC in Fiji or Arrow and ABC had operated from Fiji to export and deliver their customers orders. Accordingly, I conclude there is no Arrow and ABC engaged in full scale exports business in Fiji and I conclude the exports were executed by the Applicant.

12.3 The Respondent's additional bundle of documents was produced by the witness. R3 were the invoices raised for the staff member's payments, for telephone bills and internet payments for Arrow. The Applicant's witness Rajendra Patel admitted that there were certain staff members dedicated to Arrow and ABC and their expenses were reimbursed by Arrow and ABC. The invoice is raised by CPL for the wages. It does not prove that Arrow or ABC employed the employees. FNPF was paid by CPL. With regard to telephone bills and internet charges for Arrow, CPL had raised invoices and the rent payment too. Although it was stated as rent there was no rental agreement. All these payments were made which was not denied by the witness of the Applicant and he stated that such payments made from the advance deposit made by Arrow and ABC and CPL had dedicated storage space, staff assigned and telephone and internet connections to meet the business needs of Arrow and ABC. The Respondent's witness referred to the email which was written by CPL to Nick stating that there are no funds to conclude that there was an involvement by Nick in the business of Arrow and ABC in Fiji. In absence of any evidence to say how much time spent in the business premises of the Applicant and also failing to establish what time period he spent in Fiji. This email do not support the Respondent's witness to conclude Nick was full time working and Arrow and ABC business was operated in Fiji with all evidence it shows Nick was only a representative who was the link between CPL and the Arrow/ABC.

12.4 The witness also admitted that by inserting the name on the return delivery cards as ABC/Arrow was nothing wrong from the tax point of view. He admitted when investigation was done he did not check the records of FNPF payments and he further stated if charges on Arrow/ABC are not separately recovered for storage, staff electricity, internet it would have been a different decision by him. My conclusion is that CPL recovered the payments for operational purposes as a business entity and it does not amount to Arrow/ABC are engaged in business of export in Fiji.

12.5 The Exhibits A1 and A2, A3, A4 to A9; A10; A11, R1 to R6 are taken into consideration by me, to analyze the evidence.

[13] Law

13.1 Section 2(1) of the VAT Decree defines zero rated supply:

Section 2(1)

"Zero rated supply means a supply described in the Second Schedule to this Decree"

The 2nd schedule states:

"Zero rated supplies (Section 2)

1. The supply of goods where the supplier has entered the goods for export, pursuant to the Customs Act 1986 and those goods have been exported by the supplier.

2. The supply of goods where the goods have been deemed to be entered for export pursuant to the Customs Act 1986, and those goods have been exported by the supplier.

3. The supply of goods where the supplier has satisfied the Commissioner that the goods have been exported by the supplier to a place outside Fiji.

4. The supply of goods where the supplier will enter the goods for export pursuant to the Customs Act 1986, in the course of, or as a condition of, making that supply.

Provided that in any case where such goods are not exported within twenty eight days of the time of supply, the supply shall, subject to paragraph (1) of this Schedule, be charged with tax pursuant to Section 15(1) of this Decree".

13.2 FRCA's position is that 1, 2, 3 and 4 in the Schedule 2 of the VAT Decree are inter-connected and interpreted together. In my view these provisions are independent from each other to arrest different situations. This matter has to be decided under paragraph 3 in brief the supplier should satisfy the Commissioner the goods are exported. I agree with the Applicant's submission.

13.3 In paragraph 3 what it states is that the Commissioner should be satisfied by the supplier who exports the goods. There is no issue that the goods are exported. It was the matter for the Commissioner decide whether the supplier has exported the goods. For the said purpose he had to consider the evidence before him. As I concluded considering the evidence given by the Applicant he had placed before the Commissioner evidence that he was the supplier and exporter of the goods it was not ABC/Arrow. There are adequate material and explanation given by the Applicant to support his position. The evidence led by FRCA did not establish the Arrow/ABC exported the goods as the supplier. The Commissioner had failed to understand the commercial arrangement between the parties and decided arbitrally on the explanation given by the Applicant, considering only on the audit carried out by the FRCA. The Commissioner had not properly analyzed the evidence before him. In the case of IRC vs. Federation of Self Employed [1981] UKHL 2; [1981] 2 All ER 93 at 113, it was stated the Commissioner is under a legal duty of fairness to a tax payer. I find in this matter, Commissioner failed to adhere to the said principle of fairness. The Applicant cited from Halsbury's 4th Edition Vol 1 para 20 and 30 "The Commissioner's powers of audit must be exercised in good faith and should not be used for an ulterior purpose". I further conclude the Commissioner's findings are based on irrelevant factors submitted by the Auditor of FRCA.

13.4 The evidence led by FRCA it was established that they have not correctly investigated into the commercial nature of the transaction specifically:

(a) the role of Nick the representative of Arrow/ABC;

(b) the purpose of the storage area dedicated to Arrow/ABC;

(c) how the account maintained with the Applicant was operated (once the expenses were incurred and/or payments were made);

(d) no evidence found to prove it was a local supply;

(e) did not address why the postal invoices were made to facilitate the customer's of Arrow/ABC considering the commercial nature of the transaction. Most of the return to sender card was addressed to Arrow/ABC to facilitate the customers of Arrow/ABC to have viable commercial venture and the customer did not have dealings with the Applicant;

(f) the payment of supplier was utilized after the export order was made, from the deposit. The witness for FRCA did not check what stage the payment was recovered which was vital to this case. Considering all evidence before me, I conclude there was no presence of Arrow/ABC in Fiji and Applicant was the supplier and exporter within the meaning of paragraph 3 of the second schedule to the VAT Decree.

13.5 The Respondent argued goods were not entered for export. I have already concluded that the paragraph 1, 2, 3 and 4 of the 2nd Schedule of VAT Decree operate independently and the requirement is only under paragraph 3. The value of the goods as declared is below $600.00 and the mode of export was by post and not by shipping. Customs Declaration CN22 was affixed to the parcel posted to the recipient. There is no evidence before me that value was over $600.00. The witness Talemaimaleya admitted he had not crossed check the value. He also admitted the declared value in CN22 was shown in the ledger of the Applicant. There was no discrepancy on the entries in the ledger as such mere statement by the witness that the value of the goods were over $600 cannot be accepted. The Applicant's counsel referred to provisions in New Zealand (CCH NZ GST Guideline page 5, 5111) which enumerates goods under the value of NZ$1000 in value deemed to be exported when accepted for posting by NZ Post Ltd. He further submitted referring to Tax information bulletin Vol. 6 No. 7 Dec. 1994 at 15 for export less than $1000 which are posted, the NZ Commissioner only requires a NZ post invoice as evidence of export. If the FRCA wanted to check the value of the goods they should have developed a system to get the declaration CN22 and if they are not satisfied on the declared value they should have inquired into it. I am of the view it is now the time for FRCA to develop a system to arrest such situations like in Australian Customs and Border Protection Service. If no action had been taken, the FRCA cannot impose the Applicant to comply with paragraph 1 of the second schedule. I am satisfied the Applicant complied with requirements under the paragraph 3 of the second schedule to the VAT Decree.

13.6 It was the position taken up by the witness Talemaimaleya since ABC/Arrow paid deposits into the Bank Account of the Applicant and the draw downs for rental staff wages and utilities and postage and such payments are for local supply by the Applicant. As such FRCA decided CPL is not qualified for zero rated. I don't agree for the reason that Talemaimaleya did not considered the procedure adopted by the Applicant to effect the orders from Arrow/ABC. As I stated earlier, in this judgment FRCA had not paid attention to the commercial venture between the Applicant, Arrow and ABC. FRCA's Auditor presumed since the monies were deposited by Arrow/ABC and considering Nick's role as the Representative this was a local supply by the Applicant which is not so. I conclude the Arrow/ABC did not have a venture established in Fiji to do the exports. They only had a fulfillment centre operated by the Applicant as the supplier to export the items ordered by their customers.

13.7 The taxable activity is defined in the Section 4 of the VAT Decree:

"For the purposes of this Decree the term 'taxable activity' means –

(a) any activity which is carried on continuously or regularly by any person, whether or not pecuniary profit, and involves or is intended to involve, in whole or in part, the supply of goods and services to another person for a consideration and includes any such activity carried in the form of a business, services, trade, manufacture profession, vocation, association or club".

The evidence of the Applicant establishes Arrow/ABC was not engaged in a business activity under Section 4. FRCA failed to dispute this position in their favour. There was no supply of goods or services by Arrow/ABC. Supplier was CPL and they exported the goods. I considered the New Zealand case authority cited by the Applicant, Commissioner of Inland Revenue vs. Data Systems Ltd (1989) 11 NZ TC 6, 093 at 6102(A) Richardson J. stated:

"It is not an activity in the abstract of a taxable activity is directed to the "supply of goods and services" to any other person for a consideration.....In short, the definition of taxable activity reflects the schedule of S. 8(1) charging tax on a supply of goods and services"

There was no supply of goods by the Arrow/ABC in this case, and I conclude there is no taxable activity or a local sale.

13.8 Nick's role as the local representative of the Applicant did not establish the presence of Arrow/ABC in Fiji for the reasons set out in the precedent paragraphs. As such I further conclude there was no taxable activity under Section 4 by Arrow/ABC in Fiji and the Respondent fails.

13.9 The Respondent raised the issue of the storage room and I am satisfied it was part of the commercial venture between CPL, Arrow and ABC. CPL to provide the services as a fulfillment center and it is related to the export of goods which is zero rated under Section 15(a) of the second schedule.

13.10 The Applicant had not utilized the advance payment made to the running account of CPL and it was utilized once the expense incurred or purchase was made and all such payments were raised through invoices and entered in the ledger account of Arrow/ABC maintained at CPL and these issues are decided in favour of the Applicant and conclude the Applicant is the supplier of the export goods.

13.11 The Respondent also relied on Section 17 2(c) and Section 17 (5)(a) of the VAT Decree to prove that Arrow/ABC engaged in a taxable activity in Fiji by exporting goods. The said section applies to the supply of services not for supply of goods and as such OECD Model/Convention 2010 is not relevant and does not warrant any consideration.

13.12 The Respondent submitted that from the time Arrow and ABC paid the purchase price of the goods they became the owners of the goods and not the Applicant. However, as I concluded in preceding paragraphs the Applicant remained the supplier and exporter of the goods from Fiji. The payment of the purchase price does not deny the Applicant from being an exporter. The Applicant established how the payment was made and the commercial contract was executed with Arrow and ABC as such I conclude that Applicant CPL was the supplier and exporter of the goods and further conclude the Applicant proved same in balance of probabilities.

13.13 As submitted by the Respondent Section 16(2) cannot be applied since the goods delivered to the customers outside of Fiji. Whether it was sent by the Applicant or Arrow or ABC do not change the position that the goods were exported.

13.14 Section 16(3) of the VAT Decree states:

"16(3) In relation to a supply of goods which involves their removal –

(a) From Fiji, those goods shall be deemed to be supplied in Fiji;

(b) To Fiji, those goods shall be deemed to be supplied outside Fiji".

Goods deemed to be supplied in Fiji under Section 16 3(a) are not liable for VAT at the rate of 12.5% it is at 0% if those supplies are zero rated, Section 15 states Imposition of the tax on supply:

"15(1) Subject to the provisions of this Decree, the tax shall be changed in accordance with the provisions of this Decree at the rate of Twelve and a half percent (but no including an exempt supply) in Fiji of goods and services on or after 1st day of July 1992, by a registered person in the course of furtherance of a taxable activity carried on by that person, by reference to the value of that supply.

(2) Where, but for this sub section, a supply of goods and services would be charged with tax under sub section (1) of this section, any such supply shall be charged at the rate of zero percent where that supply is a zero-rated supply".

In this case it was concluded goods were exported by the Applicant and if the Respondent's submission with regard to the interpretation of Section 16(3) (a) is incorrect because such interpretation every supply whether exported or not will be deemed made in Fiji and taxable at the standard rate and such interpretation would result in the Section 15(2) and the second schedule to the VAT Decree redundant which was not the intention of the legislature.

There is no merits on the argument by the Respondent. To arrive at this conclusion I also taken into consideration GST – A practice guide – 7th edition by Alastair McKenzie at p14.

13.15 I conclude considering all the evidence led and the submissions made by the parties the Applicant had proved in balance of probabilities that it is entitled for zero-rated supplies which are exported to the customers of Arrow/ABC outside Fiji.

Accordingly, I answer the issues raised in paragraph 10 as follows:

(a) The Applicant's supplies of pharmaceutical goods by postal services to its overseas purchasers were zero rated sales under second schedule to the VAT Decree; and

(b) Arrow and ABC both incorporated and registered in Vanuatu did not have any taxable activity establishment in Fiji for VAT purposes.

[14] Accordingly, I make the following Orders:

1. I set aside the objection decision of the Respondent dated 26th October 2012 and Order that the Applicant's Assessment for Value Added Tax issued by the Respondent on 19 July 2012 is void.

2. The Respondent is ordered to pay $2,500.00 to the Applicant costs summarily assessed.

Delivered at Suva this 1st Day of May 2015

........................
C. KOTIGALAGE
JUDGE