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A tourism operator has won a case against Inland Revenue to have $6.28 million in goods and service tax paid back after a seven-year fight over a cheque that bounced.
Contract Pacific, which sold New Zealand-based holiday packages to overseas wholesalers, originally filed for a $7.54 million GST rebate in 2000.
Its claim was based on the fact that it had been paying tax on a service sold to people outside New Zealand between June 1993 and April 1999, a period when it was not clear whether inbound tourism operators had to pay GST for overseas services.
In April 1999 the National Government closed the loophole with a law making it clear GST was payable.
But it was not retrospective, leaving inbound operators open to claim for what they saw as overpaid GST in the past. Contract Pacific was one of many operators to pursue its claim.
At the time Inland Revenue said it would investigate the case but during the investigation an automatic computer-generated statement and cheque was sent out to the company accidentally paying out the amount owed. The IRD then put a stop on the cheque, causing it to bounce.
During the IRD's investigations of the claim, the new Labour Government decided to make it law in 2001 that operators would also have to pay GST retrospectively except in special cases where an exclusion could apply.
Contract Pacific claimed its case met the exclusion criteria because the IRD had paid it but then bounced the cheque and decided to pursue action in the High Court in 2006.
Last month Justice Ailsa Duffy agreed the company was entitled to $6.28 million, the amount owed after deducting a smaller claim repaid earlier.
Barry Doody, managing director of Contract Pacific, which has since stopped trading, said the decision had been a long time coming. "It's eight years this February. Things don't move quickly in the courts."
The money would be used to pay creditors owed over $1 million as well as legal fees.
