MIRA Audit Assessment Nullified on Violation of Procedure

On 23 October 2018, a three member bench of the Tax Appeal Tribunal unanimously decided in favor of a taxpayer citing MIRA’s failure to follow the procedure stipulated in law when collecting information for an assessment.

The Appellant, Abdulla Shareef, filed an appeal with the TAT on the grounds that the MIRA erred in their GST Assessment citing that the MIRA levied additional tax on a transaction that the appellant correctly charged and paid GST to the MIRA in accordance with the Tax Laws.

The Tribunal, in its decision, set an important precedent, which effectively clarified the MIRA’s power to collect information related to the taxpayer from a third party during an audit. Tribunal Member Uza. Minhath, in her ratio decidendi, stated that the information obtained from a third party by the MIRA was not in accordance with the law. The procedure for third party document requests, under Section 32 of the Tax Administration Act must be followed and Section 23 of the Tax Administration Regulation does not grant MIRA the authority to circumvent the procedures set out in the Tax Administration Act. As such the Tribunals decision has made it clear that the MIRA must follow the procedures in the Tax Administration Act when collecting information from a Third Party during an audit.

The Appellant was represented in the Tribunal by lawyers and tax advisors of CTL Strategies LLP.