Randeep S Grewal v. Commissioner of Inland Revenue

HCIA 3/2022

[2022] HKCFI 3393

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INLAND REVENUE APPEAL NO 3 OF 2022

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BETWEEN

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Before: Hon K Yeung J in Chambers

Date of Hearing: 2 November 2022

Date of Decision: 9 November 2022

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DECISION

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1.This is the oral hearing for the Applicant’s application pursuant to section 69 of the Inland Revenue Ordinance, Cap 112 (the “IRO”) for leave to appeal against the Decision of the Inland Revenue Board of Review dated 27 April 2022 (the “Board”, and the “Decision”).

2.The Applicant has filed his Statement of Grounds and Reasons of 27 May 2022 (“A/SG”). The Respondent (“CIR”) has filed his of 10 June 2022 (“CIR/SG”). Leave is resisted. The Applicant filed his supplemental statement of 15 June 2022 (“A/SSG”), in effect in reply to CIR/SG.

3.I have directed that there be a hearing be held for the leave application.

4.I have considered A/SG, CIR/SG and A/SSG filed by the parties. I have considered the written submissions made by Mr Barrie Barlow SC and Mr Julian Lam, respective counsel for the Applicant and CIR. I have also considered their oral submissions. For the following reasons, I grant the Applicant leave as sought.

5.The appeal before the Board related to the Determination of the Deputy Commissioner of Inland Revenue dated 7 July 2020 rejecting the Applicant’s objection to a number of specific salaries tax assessments.

6.The main ground the Applicant relied upon before the Board was:

“The Commissioner has incorrectly concluded that [the Applicant’s] employment was located in Hong Kong. On the basis of the established law and the facts of the case, [the Applicant’s] employment should be considered as located outside Hong Kong.”

7.For reasons set out in the Decision, the Board dismissed the appeal. In the course of its deliberation, the Board considered extensively the case of CIR v Goepfert [1987] HKLR 888 and Lee Hung Kwong v CIR [2005] 4 HKLRD 80.

8.In A/SG, the Applicant raises 2 questions (“Q1” and “Q2”). Q1 queries the correctness of Goepfert and Lee Hung Kwong. Q2 is subdivided into 2 sub-questions (“Q2(1)” and “Q2(2)”). Q2 is alternative to Q1. It assumes the correctness of Goepfert and Lee Hung Kwong. On that alternative basis, Q2(1) asks whether the Board has correctly applied Goepfert and Lee Hung Kwong. Q2(2) asks whether, upon the facts as agreed and found, the true and only reasonable conclusion upon application of the correct law is that the residence of the Applicant’s employer was not Hong Kong.

9.Under section 69(3)(e) of the IRO, leave to appeal must not be granted unless the Court is satisfied that the proposed appeal has a “reasonable prospect of success”, or there is some other reason in the interests of justice why the proposed appeal should be heard. A proposed appeal has a reasonable prospect of success if it is reasonably arguable, not that it will probably succeed: China Mobile Hong Kong Co Ltd v CIR [2018] 2 HKLRD 146, per Chow J (as he then was) at §16.

10.Mr Lam’s main bases of objection are that, in respect of Q1, it is not engaged in the light of the grounds raised by the Applicant before the Board, that it is otherwise not reasonably arguable, and that in any event it is not reasonably arguable that the Decision would have been different; and that in respect of Q2, both Q2(1) and Q2(2) are not reasonably arguable.

11.The correctness of Goepfert has been raised before the Board. The question raised related specifically to the correctness of the characterization of subsection 1(A) of section 8 of the IRO as an “extension” of the charge. The issue has also been raised as to whether Goepfert has been implied overruled by the Court of Final Appeal in Fuchs v CIR (2011) 14 HKCFAR 74 – see §63 of the Decision. The point may not however have been fully developed given the fact that Goepfert is binding on the Board.

12.In my view, Q1 is engaged, and is reasonably arguable.

13.In relation to Q2, I have considered the number of passages in the Decision highlighted in A/SG, and in particular §§71(5), 82-84, 88, 90 and 92 of the Decision. In my view, Q2 is also reasonably arguable.

14.Coming back to Q1, I also accept Mr Barlow’s submissions that if leave is to be granted on Q2, the approach adopted in Goepfert will need to be considered during the substantive appeal, and it would be highly undesirable if the court were to be hamstrung in its consideration of Goepfert. On this basis, I would if necessary also grant leave in relation to Q1 on the interests of justice limb (which Mr Barlow also relies upon), given the importance of the charge in section 8 of the IRO, the time that has elapsed since that judgment, and the jurisprudence that has developed since.

15.As I am granting the Applicant leave, and so as not to affect the fairness of the substantive appeal, I will confine myself to the provision of the brief reasons above.

16.I grant the Applicant leave to appeal as sought, on both Q1 and Q2 (including Q2(1) and Q2(2)). The hearing date is to be fixed in consultation with counsel’s diary, with 1 day reserved. Costs of and occasioned by this application for leave, including those of and by this hearing, be in the cause of the appeal.

Mr Barrie Barlow SC instructed by KB Chau & Co, for the Applicant

Mr Julian Lam instructed by Department of Justice, for the Respondent