Commissioner of Inland Revenue v. Ng Chun-kwan
Read the full judgment text of DCCJ 4568/1975 on BabelCite. This District Court judgment.
1. By this action, the Commissioner of Inland Revenue seeks to recover Profits Tax in the sum of $762,647.00. The Defendant has filed a Defence and Counterclaim, but in the course of these proceedings, the Counterclaim was abandoned. The Commissioner applies to have the Defence struck out and for leave to sign judgment as claimed. The Commissioner relies on S.75(4) of the Inland Revenue Ordinance which reads as follows:-
Cited by 6 cases
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DCCJ004568/1975 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CIVIL JURISDICTION Action No. 4568 of 1975 -----------------
----------------- Coram: Judge Liu. Q.C. in Chambers. Date of Judgment: 9th October 1975. ----------------- JUDGMENT ----------------- 1. By this action, the Commissioner of Inland Revenue seeks to recover Profits Tax in the sum of $762,647.00. The Defendant has filed a Defence and Counterclaim, but in the course of these proceedings, the Counterclaim was abandoned. The Commissioner applies to have the Defence struck out and for leave to sign judgment as claimed. The Commissioner relies on S.75(4) of the Inland Revenue Ordinance which reads as follows:-
2. Mr. Litton appearing for the Defendant submits that his client is entitled to challenge the validity of the assessments and that consequently the pleading discloses a reasonable defence. The exercise of powers by the assessor in his additional assessments is impugned by the defence as being ultra vires S.60 of the Inland Revenue Ordinance. It is submitted that the expressions "Where it appears to an assessor" and "according to his judgment" in S.60 create a somewhat restricted mandate whereby no additional assessments may be made arbitrarily, fancifully or on irrelevant considerations. Authorities have been cited to illustrate how the assessor's powers under S.60 ought to be exercised.(1) It is urged upon me that a taxpayer should not be precluded from enquiring into the mental process of the assessor in the District Court for the purpose of impugning the validity of his assessment. With usual ability, counsel for the defence embellishes a plainly incontestable issue with a penetrating but none the less fair argument. 3. In my view, the defence here can be no more than a mere denial of the taxpayer's liability to pay allegedly invalid assessments said to have been made ultra vires the powers of the assessor under S.60 of the Inland Revenue Ordinance. It has been said time and again that S.75 of the Inland Revenue Ordinance provides "a convenient machinery for the collection of a debt due and payable to the Crown". See C.I.R. v. Wah Feng & Co.(2) and C.I.R. v. Au Yuk Shuet(3). Tax liability has for a great many years been entrusted to the exclusive jurisdiction of the assessor, the Commissioner, the Board of Review, and the Supreme Court. Pickering, D.J., as he then was, summed up succinctly in C.I.R. v. Au Yuk Shuet(3) at p.493: "Indeed to hold that the District Court has a concurrent jurisdiction in regard to issues of liability would lead to absurdity for if that were the case a taxpayer whose appeal has been dismissed by the Commissioner, the Board of Review, the Supreme Court and the Privy Council could, upon being sued by the Commissioner for tax previously in dispute, raise the same issues all over again in the District Court"; and a contention based on a denial of liability was described by the same learned judge as "merely another way of saying that tax is excessive or incorrect". 4. Mr. Litton submits that we are not dealing here with incorrect assessments, as none of them has even begun to become an assessment within the meaning of S.60 of the Inland Revenue Ordinance, and that in substance the defence is not or not exclusively an issue of liability. In my opinion, the word "incorrect", appearing in the same sub-section with "excessive", does not warrant too narrow a construction; after all it is defined in the Concise Oxford Dictionary as "Not in accordance with fact, improper, faulty". The word under consideration is "incorrect" and not "inaccurate". In my judgment, an allegedly void assessment is, nevertheless, an incorrect assessment of tax. As I have said earlier, the challenge to the validity of the assessments is a subtle attempt to dispute the taxpayer's liability. Even if the real defence in this case could stand on its own, independent of the issue of liability, it would still be caught as an allegation of incorrect assessments of tax by S.75(4) of the Ordinance. 5. Apart from the proper construction of the word "incorrect" in S.75(4), the sub-section itself was obviously devised to shut out all defences in the District Court except service, identity and other procedural irregularities. S.64(1) of the Ordinance enables a person aggrieved by an assessment to object to the Commissioner. S.66(1) creates a right of appeal to the Board of Review on notice accompanied by inter alia "a statement of the grounds of appeal". S.68(4) puts the onus of proof in a tax appeal to the Board of Review on the shoulders of the appellant, and it is undeniable that suoh onus rests, in every possible issue raised in a Notice of Appeal, with him. S.68(4) is therefore a comprehensive provision intended to give a full coverage to all available grounds of appeal, and the material words used therein are "excessive" and "incorrect" assessments. In my view, these two adjectives were intended by the legislature to wrap up all the arguments tenable before a Board of Review on appeal including that of validity. In another words, by these two words "excessive" and "incorrect" the legislature intended to provide an exhaustive description to every possible argument available to an appellant on a Notice of Appeal from the Commissioner's determination. The same two adjectives are, in my view, deliberately repeated in S.75(4), and all the issues which could have been advanced as part of the "grounds of appeal" for the Board of Review are therefore meant to be excluded from and consequently cannot be entertained by the District Court. 6. In conclusion, the pleas in the Defence are barred, and it must be struck out. 7. Mr. Johnson has intimated that he would produce the relevant Certificate, and I see no reason why I should not receive it. Judgment as claimed with costs on the upper scale is therefore given in favour of the Commissioner against the Defendant. Certificate for counsel.
Representation: Mr. Johnson, C.C. for Plaintiff. Mr. Henry Litton, Q.C. and Mr. K.H. Woo, instructed by Messrs., K.C. Yung & Co. for Defendant. (1) Giris Pty. Ltd. v. Federal Commissioner of Taxation, A.T.R. Vol.1 3 at p.p. 7 & 8; Simon's Taxes Vol. A A3.231; Whiteman & Wheat croft (1971) 24-04; R. v. Kensington I.T.C. [1913] 3KB 870 at p.p.889 & 890; Argosy Co. Ltd. v. Guyana C.I.R., A.T.R. Vol.2 49 at p.p.50, 51 & 53; Chan Yat San & Others v. A.G. MP 27/75. (2) 1960 HKLR 94 at p.97. (3) HKTC 489. |
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