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CACV000004/1983
Revenue Law - Striking out Defence - Operation of section 75(4) of the Inland Revenue Ordinance to oust the jurisdiction of the Courts to entertain a plea that the tax is incorrect.
IN THE COURT OF APPEAL
BETWEEN
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The Commissioner of Inland Revenue, Hong Kong
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Plaintiff (Appellant) |
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and
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Choy Sau Kam |
Defendant (Respondent) |
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Chan Yun |
Defendant (Respondent) |
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__________
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Coram: Yang, Barker, JJ.A. & Kempster, J.
Date: - 9 NOV 1983
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JUDGMENT
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Barker, J. A.:
1. The judgment I am about to deliver is the judgment of the Court.
2. These are two appeals by the Commissioner of Inland Revenue from refusals by a District Judge to strike out the defences of the Respondents. By consent, the appeals were heard together.
3. The writs in each case are tin the same form. By way of illustration, we set out the Particulars of Claim in Action No. 1008 of 1980.
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The Plaintiff's claim is for Tax under the Inland Revenue Ordinance, Cap. 112, in default as follows:
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Nature of |
Year of |
Charge
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Tax |
Assessment
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No. |
Amount |
Due Date
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Property |
78/79
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(038)573/74 |
$982.00
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31.12.79
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-738-OY |
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Property |
79/80
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(060) |
$982.00
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31.12.79
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4. Property tax is chargeable under section 5(1) of the said Ordinance, which provides as follows:
" Property tax shall, subject to the provisions of the Ordinance, be charged for each year of assessment on every person being the owner of any land or buildings, or land and buildings wherever situate in the Colony and shall be computed at the standard rate on the net assessable value of such land or buildings or land and buildings for each such year."
5. By section 6(1) (since repealed but relevant to these appeals)
" Property tax shall be payable in the first place by the person, whether owner, agent, or occupier, who pays the rates in respect of the land or buildings or land and buildings taxed."
6. Section 62(1) states:
" The Commissioner shall give a notice of assessment to each person who has been assessed stating the amount assessed, the amount of tax charged, and such due date for payment thereof as may be fixed by the Commissioner."
7. Sections 64, 66, 68 and 69 deal with the procedure for challenging an assessment.
8. Section 64(1) provides:
" Any person aggrieved by an assessment made under this Ordinance may, by notice in writing to the Commissioner, object to the assessment; but no such notice shall be valid unless it states precisely the grounds of objection to the assessment and,....... is received by the Commissioner within one month of the notice of assessment
9. Provided that
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(a) |
if the Commissioner is satisfied that owing to absence from the Colony, sickness or other reasonable cause, the person objecting to the assessment was prevented from giving such notice within such period, the Commissioner shall extend the period as may be reasonable in the circumstances." |
10. Section 64(2) provides, so far as relevant:
" On receipt of a valid notice of objection under subsection (1) the Commissioner shall consider the same and within a reasonable time may confirm, reduce, increase or annul the assessment objected to..... "
11. By section 66(1)
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Any person (hereinafter referred to as the appellant) who has validly objected to an assessment but with whom the Commissioner in considering the objection has failed to agree may within:
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(a) |
1 month after the transmission to him.... of the Commissioner's written determination together with the reasons therefor and the statement of facts; or
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(b) |
such further period as the Board may allow............ |
give notice of appeal to the Board."
12. By section 68(8)(a):
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After hearing the appeal, the Board shall confirm, reduce, increase or annul the assessment appealed against or may remit the case to the Commissioner with the opinion of the Board thereon." |
13. Section 69(1) provides:
"The decision of the Board shall be final: Provided that either the appellant or the Commissioner may make an application requiring the Board to state a case on a question of law for the opinion of the High Court.."
14. Section 69(5) reads:
" Any judge of the High Court shall hear and determine any question of law arising on the stated case and may in accordance with the decision of the court upon such question confirm, reduce, increase or annul the assessment determined by the Board."
15. And there are provisions in a further section for appeals to the Court of Appeal and to the Privy Council.
16. It is the Commissioner's submission that the above quoted four sections form a comprehensive code for, and the only method of, objecting to and appealing from an assessment for tax.
17. One further section of the Ordinance must be mentioned, and that is section 75, which reads as follows:
" (1) Tax due and payable under this Ordinance shall be recoverable as a civil debt due to the Crown.
(2) Whenever any person makes default in payment of tax the Commissioner may recover the same by action in the District Court notwithstanding that the amount is in excess of $20,000.
(3) In proceedings under this section for the recovery of tax the production of a certificate signed by the Commissioner stating the name and last known postal address of the defaulter and particulars of the tax due by him shall be sufficient evidence of the amount so, due and sufficient authority for a District Court to give judgment for the said amount.
and (4) In Proceedings under this section for the recovery of tax the court shall not entertain any plea that the tax is excessive, incorrect, subject to objection or under appeal...."
18. In answer to the Writ the Respondents each filed Defences, which in each case were amended, re-amended and re-reamended. We set put the final form of Defences in Action No. 1008 of 1980: (we omit those parts that have been deleted):
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(1) |
The Defendant does not agree that there is any liability for him to pay and he is disputing the validity of the chargeability.
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(2) |
The Defendant states that he has been carried (sic) on fish farming at Lots No. 843 and 381 in Demarcation District 52 and 51 respectively (West Portion) Off Jockey Club Road, Shek Wu Hui (Portion A), New Territories, Hong Kong and that he is using the premises for agricultural purposes.
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(3) |
Further and in the alternative, the construction of fish ponds including breeding and selling of tropical fish is an agriculture (sic) purpose.
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(4)(a) |
Further and in the alternative, the Defendant is not liable to pay property tax by virtue of section 2(1) of the Inland Revenue Ordinance, Chapter 112, Laws of Hong Kong. The said tax has never been the subject matter of an assessable value of such land or building or land and buildings as provided for in section 5(1) of the Inland Revenue Ordinance Cap. 112.
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(b)
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The Defendant says that as he is not liable to pay rates as the land and/or buildings are not liable to pay rates, any assessable value under the Rating Ordinance is and was null and void ab initio.
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(c)
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Further or in the alternative the Defendant says that because the land and/or buildings are exempted from rates there is no applicable provision in the said Inland Revenue Ordinance for the assessable value of such land and/or buildings to be ascertained.
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(d)
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Finally the Defendant says that he is not the owner of the building and relies upon the provisions of section 2(1) and section 6(3) of the said Ordinance.
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Particulars
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(1) |
The rateable value of the land was used as a basis for the assessment of property tax;
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(2) |
The Defendant is a tenant, not an owner of his land holding;
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(3). |
The land consists of fishponds with buildings erected thereon;
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(4) |
All the buildings were either used:
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(a) |
wholly in connection with such fishoponds; or
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as a dwelling house exclusively for persons engaged wholly or mainly in carrying on or directing such fishponds operations or employed as fishponds workers thereon.
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(5) |
Further and in the alternative, even if the Defendant would be liable to make payment of property tax which is not admitted, the Defendant states that by virtue of section 70A (1) of the Inland Revenue Ordinance, any assessment can be challenged and reopened within 6 years.
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(6) |
In the premises the Defendant is not liable to the amount claimed." |
19. The Judge's adjudication was as follows:
"Having considered the submission and all the authorities in support, I am satisfied that there are triable issues."
20. But this begs the question, which is, not whether these are triable issues but, whether on the assumption that there are, the Court is precluded from trying them by virtue of section 75(4) of the Inland Revenue Ordinance.
21. In Ng Chun-kwan v. Commissioner of Inland Revenue(1) Huggins, J. (as he then was) said at page 639:
"The argument on behalf of the Appellant is based..... on the principle that the Court should interpret a statute as ousting the jurisdiction of the ordinary courts only where the intention of the Legislature so to oust the jurisdiction is clear."
22. This principle we unhesitatingly accept. Consequently the only question to which we have to address our minds is whether it is clear that the matters raised in the Re-Re-Amended Defences involve a plea that the tax is "incorrect".
23. In essence the Defence case is:
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(a)
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that the assessment for rates was null and void because the land and/or buildings were not assessable to rates;
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(b)
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that the assessment for tax was a fortiori null and void because it was based on an assessment for rates which was in itself null and void;
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(c)
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that therefore an assessment for tax has never been made; and
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(d)
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that in Action No. 1008 of 1980 the Respondent, being a tenant only, could not be liable to property tax. (Such an argument does not apply to Action No. 1042 of 1980 where the Respondent was admittedly the owner.) |
24. In Ng Chun-Kwan's case(1) (op. cit.), Briggs, C. J. said at page 637 (after setting out sections 75(3) and 75(4) of the Inland Revenue Ordinance:
" The point at issue is this: Does the proposed defence of the appellant come within these subsections?
In my view it most clearly does. The proposed defence is in effect a plea that the tax assessed is 'incorrect'. To allege that the assessment is a nullity and has never been made is another way of saying that the tax which you are called upon to pay is 'incorrect' giving that word its ordinary meaning. It is, of course, a word which has a very wide meaning. To plead that the Commissioner acted ultra wires when the 'assessment' was made is merely saying that there was a wrong or incorrect assessment."
25. With these observations we agree, and they are entirely apposite to the appeals before us. We are fortified in our conclusions by two further matters, namely
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(a)
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The provisions of sections 64, 68 and 69 expressly give to the Commissioner or to the Board of Review or to the High Court power to annul an assessment and
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(b)
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the ouster of the Court's jurisdiction by virtue of section 75(4) to entertain a plea that the tax is incorrect does not mean that the taxpayer has no means of redress. He has the procedure laid down by sections 64, 68 and 69, whereby he can raise all the matters which he would have wished to raise by way of Defence. |
26. We should not, however, be taken as deciding that there can never be matters pleaded by way of defence in actions for recovery of tax in default.
27. As Briggs, C. J. said in Ng Chun-kwan's case (1) (op. cit.) at page 638:
"The wording of subsection (4) (sc. of section 75) wraps up all the objections which can be made to the assessment. This is not to say that there is no defence to a claim for tax brought by the Commissioner. There may be question as to the identity of the taxpayer for example."
28. Another example might be when the Defence alleges that the Respondent has not received a notice of assessment pursuant to section 62(1).
29. However, these are matters upon which we are not called upon in these appeals to express any final conclusions.
30. Finally, argument was addressed to us as to whether a claim for tax could be challenged by way of Judicial Review. This, too, is a matter we are not called upon to decide, and we do not do so.
31. In the result we allow the appeals and order that the Defences in each case be struck out.
(1) (1976) H.K.T.C. 636
Representation:
S. P. Graham, Esq. and Miss Mary Yuen (Legal Department) for Plaintiff (Appellant).
B. Bernacchi, Esq., Q.C. & P. Woo, Esq. (Arthur Au & Co.) for Defendants (Respondents).
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