I won’t pay tax on judgment debt interest— African Automobile boss

Mr. Mohammed Hijazi, Managing Director (MD) of African Automobile Limited (AAL), categorically stated at the Judgment Debt Commission on Wednesday that he would not pay tax on a judgment debt interest he collected from the state.

The witness was supposed to pay Ghc6.1 million to the Ghana Revenue Authority (GRA) as tax on Ghc8.2 million he collected from the state as judgment debt interest for servicing and supplying Mitsubishi spare parts to 18 ministries, departments and agencies (MDAs) between 1994-95 and 2010.

Mr. Kofi Dometi Sokpor, lead counsel of the Commission, wanted to know from Mr. Hijiazi why he did not pay tax, including penalty on the amount he collected from the state to the GRA since interest attracted tax.

No sooner had Mr. Sokpor finished asking the question than the MD retorted, “I have not paid tax and will not pay any tax on the interest”.

Hear him, “Interest is not profit to warrant the payment of tax; even if anything at all, I have rather lost for rendering services to the MDAs for the past 15 years and not receiving any payment”.

He was, however, not happy that the Commission of Inquiry had invited him for questioning as if he was a criminal, but the Sole Commissioner, Mr. Justice Yaw Apau, quickly intervened and told him that nobody had impugned him as a criminal.

The African Automobile Limited, a Mitsubishi Company in Ghana, entered into an agreement with the MDAs to maintain and supply spare parts for their vehicles.

At a point in time, the total debt owed AAL was Ghc145,652.34, which was paid, but the company resorted to legal action to claim interest on arrears not paid from 1995 to 2010, thus bringing the interest to Ghc8,232,561.49 higher than the principal sum (Ghc145,652.34).

Mr. Justice Apau did not understand why Mr. Hijazi rather sued the Attorney-General instead of suing the MDAs that signed the contract agreement in their individual capacities.

“Why did you not even notify them (MDAs) when you sued the Attorney-General?” Justice Apau quizzed.

Answering the Sole Commissioner, the MD said that he did not sue the AG, rather, he notified the Ministry of Finance and Economic Planning (MoFEP) of his intention to sue, but the ministry speedily communicated the information to the A-G.

Records available to the Judgment Debt Commission points to the fact that the A-G’s Department did not defend the case when it was filed at the Commercial Court in Accra.

The Commission later requested the witness to provide it (Commission) with all the agreements signed by each MDA for perusal. Sitting continues today, Thursday.