The High Court has upheld a decision by the Maldives Inland Revenue Authority (MIRA) requiring Turmaks, the Turkish company that constructed Tree Top Hospital, to pay MVR 25 million in unpaid Goods and Services Tax (GST) related to imported materials.
The High Court's ruling follows an appeal by Turmaks against a previous judgment by the Tax Appeal Tribunal, which had initially supported MIRA’s assessment.
The dispute originated from a contract between Tree Top Health and Turmaks for the construction of Tree Top Hospital in Hulhumalé, a project valued at USD 110 million.
Following an audit of the GST returns filed by Turmaks for the project, MIRA determined that the company owed an additional MVR 25 million in GST concerning the materials imported for the hospital's construction.
Turmaks first contested the decision at the Tax Appeal Tribunal, arguing that the materials were imported by Tree Top Health rather than by Turmaks. The company claimed that although the original contract stipulated that they would handle imports, a verbal agreement shifted that responsibility. However, the Tribunal ruled in favour of MIRA.
In its appeal to the High Court, Turmaks contended that the audit process was unfair and alleged that MIRA failed to seek necessary documentation from Tree Top Health. Furthermore, Turmaks argued that the Tribunal had erred in refusing to accept new evidence submitted during the proceedings.
In its judgment, the High Court noted that MIRA had provided Turmaks with adequate time and opportunity to respond during the audit phase. The presiding judges stated that MIRA is not legally obligated to seek documentation from third parties, emphasising that the burden of proof lies with the taxpayer when seeking tax deductions or exemptions.
The High Court further observed that no written amendments had been made to the original agreement between Tree Top Health and Turmaks. The court ruled that a taxpayer cannot be absolved of their tax liabilities based on subjective interpretations or undocumented changes. Additionally, the judges concluded that the Tribunal was within its rights to reject evidence that had not been presented during the initial audit.
The three-judge panel of the High Court unanimously upheld the Tax Appeal Tribunal's decision, concluding there were no legal grounds to overturn the original ruling.
