Steward Healthcare’s contestation of a bill close to €37 million in VAT arrears, interests and penalties was thrown out on Friday by a court that upheld a plea of lack of competence raised by the tax commissioner.

That “shortcoming” by Steward in filing its claim before the First Hall, Civil Court rather than the Administrative Review Tribunal effectively meant that its action was doomed to failure. 

Yet, after wrongly filing its case, Steward Malta Management Limited contested the plea of competence raised by the defendant, namely the Tax Commissioner, and requested time to produce evidence, which, however, never materialised. 

The dispute stemmed from a notice from the taxman, dated November 8, 2021, whereby Steward were asked to pay €36,816,847.54 in VAT arrears, interest and penalties for the period covering May 2016 to June 2021. 

That statement was to be considered “as a demand note for payment” in terms of the Value Added Tax Act, and unless contested within 30 days of notice, would give rise to an executive title in favour of the commissioner. 

That meant that failing such contestation, the commissioner may proceed to exact payment.

In this case, Steward chose to contest that bill by filing an action before the First Hall, Civil Court against the Tax Commissioner who, by way of a preliminary plea, flagged the issue that the court lacked competence to decide upon such matter. 

Steward ought to have taken their grievance before the Administrative Review Tribunal in terms of the VAT Act, argued the defendant.

The plea was contested by Steward who were granted until March 30 to produce their evidence in the form of affidavits.

That term was subsequently extended up to May 27. 

But still, Steward “did not produce anything” observed the court, presided over by Mr Justice Christian Falzon Scerri, when delivering judgment on Friday.

Instead, during a sitting on June 13, Steward informed the court that they were renouncing to evidence on that plea. 

Following written submissions, the case proceeded to judgment. 

The court observed that the First Hall, Civil Court was competent to decide upon all civil matters except those reserved specifically by law to a special board or tribunal. 

The issue of competence was one of public order and if a court decided a dispute that fell outside its competence, that decision would be null. 

And that scenario applied to the case at hand. 

The matter would have been different had the parties been private citizens rather than an action filed against the Tax Commissioner, observed the court.

It was a shortcoming by Steward in wrongly filing the case, then contesting the Commissioner’s plea, then “chose to waste months on this issue by first asking to produce evidence but later failing to do so”, remarked the judge. 

The case was filed before the wrong court “without justification” in spite of the law speaking clearly about this. 

And even worse, Steward prolonged the proceedings by promising to produce evidence and then not doing so, said the court. 

Since this was a judgment delivered in open court, rather than a decree delivered in chambers, the court could not order the records of the case to be sent to the Tribunal because Steward had a right to appeal. 

The court thus upheld the Commissioner’s plea, ordering Steward to bear the costs.