Re Independent Steamship Co Ltd

HCMP000208A/1969

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

MISCELLANECUS PROCEEDINGS NO. 208 OF 1969

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Coram: Full Court (Blair-Kerr, Mills-Owens, and huggins, JJ.)

Date of Judgment: 18th March 1970

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JUDGMENT

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Mills-Owens, J.

1. I agree that no objection lies to an unconfirmed provisional assessment. Section 62(2) clearly requires confirmation of a provisional assessment. Section 64(1) also proceeds on the basis that a provisional assessment is to be confirmed if it is to be the subject of review and appeal under Part XI, that, I think, emerges from the fact that the period within which objection is to be lodged is expressed by reference to the date of notice given under section 62(2).

2. It is true that section 64(1) refers to "the date of the notice under subsection (2) of section 62 confirming or amending such (provisional) assessment", when section 62(2) contains no reference to amendment of provisional assessments. In the present case there is no suggestion that the provisional assessment was ever amended, as such. In any event the reference to amendment in section 64(1) cannot override the clear requirement of section 62(2) that provisional assessments are subject to confirmation. In endeavouring to reconcile these provisions - in particular to find a meaning for the reference to amendment in Section 64(1) - it is permissible, in my view, to read that reference as contemplating that under section 62(2) a provisional assessment may be confirmed with amendment; that would be consistent with the reference to amendment in the proviso to section 59(2) which speaks of the assessor provisionally accepting a return as substantially correct, in which case he has some minor reservation which ultimately he must resolve and where therefore, his provisional assessment may well come to be amended. In such a case confirmation under section 62(2) would take into account the amendment and operate as a confirmation with amendment.

3. It is true also that section 59(2) provides that a provisional assessment shall be valid for all purposes, but the intention, I have no doubt, is to enable tax based on the taxpayer's return to be recovered pending the inquiries which the assessor deems necessary. The subsection provides for the case where the taxpayer's return is accepted as substantially correct, in which case, therefore, it is reasonable to require payment of tax calculated on the basis of the return. The wording of section 59(2) is to be contrasted with the wording of section 60, relating to additional assessments, which specially invokes the provisions of the Ordinance relating to appeals.

4. The reference in section 64(1) to amendment by notice given under section 62(2) may therefore, I think, be reconciled with the provisions of section 62(2) if those provisions are read as extending to confirmation with amendment; in my view, they are capable of being so read, especially when regard is had to the fact that section 59(2) expressly contemplates amendment of provisional assessments.

5. On the question whether a provisional assessment may be appealed against I would take the view that it is inherent in the nature of a provisional assessment that sooner or later it must be confirmed (with or without amendment), unless it be withdrawn or superseded by a 'firm' assessment. The object of providing for provisional assessments must be to allow the assessor a latitude which otherwise he might not have; to meet the occasion when it might be urged that the taxpayer is being unduly harassed by successive (firm) assessments. A provisional assessment gives fair warning to the taxpayer that the matter remains open. It also allows of speedy recovery of tax admittedly due (section 59(2)). But it is not, in my opinion, to be taken as intended by the legislation that the whole machinery of appeal laid down by Part XI may be invoked in respect of a provisional assessment; the appeal could well be rendered nugatory by reason of the assessor deciding, in the course thereof, that his inquiries under section 59(2) are to be resolved in favour of the taxpayer.

6. As to the proviso (c) to section 62(1), the object, as I see it, is to preclude the reopening of concluded assessments. Such a situation might arise where, either, an additional assessment is made, or, an assessment previously made is amended - amended, possibly, in favour of the taxpayer. The proviso (c), as it appears to me, was intended to embrace both situations. The reference therein to an 'amended assessment' is not necessarily a reference only to an amended provisional assessment; it is equally capable of being a reference to a 'firm' assessment which comes to be amended. It must, surely, be open to an assessor to accept a taxpayer's objection, formal or informal, to a 'firm' assessment and to act upon such acceptance by substituting an amended 'firm' assessment without thereby reopening extraneous matters, that is to say matters not arising out of the (accepted objection. The proviso does not assist on these questions of construction, in my opinion.

7. The Australian case of Scarfe & ors. v. The Federal Commissioner of Taxation (1928) 28 C.L.R. 271, relied upon by counsel for the applicant taxpayer, does not in my view assist him, the decision being one to be viewed, as it appears, in the context of the legislation on which it was based. The contention for the taxpayer in the present case is that where a statute provides for an appeal if objection is lodged 'within' a specified period after a stated event (as in section 64(1)), the word 'within' is not necessarily to be read as delimiting a starting point of time as well as the final point of time for the objection; in other words that, in the context of a statute, 'within' may mean 'not later than' the end of the specified period. In the Australian case the court found reason, in the context of the relevant legislation, to adopt that construction. In the context of the Ordinance which we are now concerned with, I see no reason to give to the word 'within' any meaning other than its ordinary meaning.

8. On the second point, namely that the alleged objection fails by reason that it did not raise the matter of the balancing allowance, I agree that it is clearly the case that it made no reference whatsoever to that matter; on the contrary, it was confined to the entirely different matter of a trading loss. On this aspect of the case also, therefore, the Commissioner is entitled to succeed.

9. As has been pointed out, this is not a case of the Commissioner taking advantage of a technicality.

10. I would therefore dismiss the application.

18th of March 1970

Representation:

Mr. H. Litton (P.H. Sin & Co.) for Applicant.

Mr. E. Thistlethwaite for Inland Revenue Department.

Judgment handed down.