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Commissioner of Inland Revenue v Bale [1995] FJHC 77; Haa0012d.1994s (21 April 1995)

IN THE HIGH COURT OF FIJI
AT SUVA
APPELLATE JURISDICTION

CRIMINAL APPEAL NO. HAA0012 OF 1994

Between

COMMISSIONER OF INLAND REVENUE
Appellant

And

QORONIASI BALE
Respondent

Counsel: Mr. Bale for Appellant
Mr. Seru for Respondent

Hearing: 20 April 1995
Decision: 21 April 1995

ORAL RESERVED DECISION OF PAIN J.

This is an appeal by the Commissioner of Inland Revenue against the penalty imposed upon the Respondent in the Magistrates Court on three charges for failing to comply with a notice issued under Section 50(1) of the Income Tax Act.

Respondent failed to file Income Tax Returns by due date for the years 1986, 1987, and 1988. By notice dated 19th January 1990, the Commissioner required delivery by the 19th February 1990, of those tax returns, together with statements of assets and liabilities and analyses of drawings for the same years. The Respondent failed to comply with the notice. On the 30th May 1991 (over l5 months after the default occurred), the Commissioner laid three separate charges for failing to supply the tax returns, statements of assets and liabilities, and analyses of drawings as required by the notice. These charges were adjourned in excess of over twenty times over a period of approximately two years to enable the Respondent to comply with the notice. Compliance was finally made on the 2nd June 1993. On the 7th June 1993 the Respondent pleaded guilty to the three charges and a fine of $1.00 per day for 180 days was imposed on each charge. That amounted to a total of $540.00.

In the petition of appeal dated 2nd July 1993, the petitioner appeals against the sentence on the ground that the level of fine imposed by the learned Magistrate, was, in all the circumstances, so lenient as to constitute an error of law.

It will be noted that the appeal is restricted to the level of fine. This was fixed by the Magistrate at $1.00 per day.

There is no ground of appeal, challenging the period of 180 days default fixed by the Magistrate. The period for which fines at the daily rate can be imposed (sometimes referred as the "culpable" or "punishable" period of default) has been adverted to in a number of cases in this court. For instance the decisions in Commissioner of Inland Revenue v Macaskill (Criminal Appeal No. 74 of 1991), Patel v Commissioner Inland Revenue (Criminal Appeal No. 97 of 1991) and Commissioner of Inland Revenue v Wendt (Criminal Appeal No. 76 of 1990) purport to follow Dean v R 19 FLR 158 which considered the effect of Section 219 of the Criminal Procedure Code. These decisions limit the period to six months or 180 days. This period appears to have been adopted as a matter of practice by some Magistrates. However more recent decisions of Commissioner of Inland Revenue v Patel (Criminal Appeal No. 14 of 1994), and Commissioner of Inland Revenue v Qauqau, (Lautoka High Court, Criminal Appeal No. 92 of 1992), have adopted a different approach and fixed the period as commencing at the date of default (but limited by Section 219 of the Criminal Procedure Code to a maximum of six months prior to the laying of the charge) until the date of compliance. Counsel for the Respondent also referred to the case of Parekh v the Commissioner of Inland Revenue, (Criminal Appeal 12 of 1991) which restricted the period to the dates specified in the charge. However that decision fails to take into account the continuing nature of the offence created by Sections 50(1) and 96(1) of the Income Tax Act.

Resolution of this particular issue does not arise in this case. The Appellant in drafting the appeal clearly accepted the period of 180 days fixed by the Magistrate as correct. It is only the level of the daily of rate of fine that has been challenged.

In fixing the daily rate the Magistrate must have regard to the gravity of the offending and the total overall criminality represented by the three charges. Although the daily rate has been applied for a period of only 180 days, that daily rate must result in total fine that is appropriate for and reflects the gravity of the overall offending.

The offending in this case must be regarded as particularly serious. The Respondent was in flagrant breach of his legal obligations to the Commissioner and was guilty of an inordinate default and delay. At the time the notice was given the Respondent was overdue in filing tax returns for up to 3 years. He was then in default under the notice for 3¼ years before the returns were filed. This included successive adjournments of charges in the Magistrates Court for an incredible period of two years. This overall default and delay is by far the longest I have encountered in any appeal I have heard or decision I have read on similar offending. All this conduct was by a professional person who would have been well aware of his obligations and the consequences of his default. A person who, because of his high position, should have been setting an example to the community for observance of statutory and civil responsibilities.

In all these circumstances a fine at the rate of $1 per day which is only 2.5% of the maximum of $40 must be regarded as paltry. The fine imposed in Magistrates Court in this case is inadequate for default under the notice for a period in excess of 3 years. It also fails to take into account the aggravating features of the offence committed by a person who was not without means. The sentence is so manifestly inadequate that there must have been some error in the sentencing discretion.

A more substantial penalty must now be imposed. In fixing this I have some regard to the matters raised by Counsel on behalf of the Respondent. There is little mitigation in the fact that the notice was ultimately complied with because that was after such an inordinate delay. There may have been some problem with obtaining records and having work done after the Respondent left the Attorney General's office, but that is disproportionate to the delay. As far as the record goes, the Respondent is a first offender. Some allowance must also be made for the "double jeopardy" suffered by the Respondent when a higher penalty is now imposed almost two years after the original sentence.

Counsel for the Respondent also submitted that the charge of failing to file tax returns as required by the notice is the substantial offence. The other two charges relate to the supply of further information which is dependent on the filing of the tax returns. This is a valid point. The default in supplying that further information was not preceded by any delay in complying with a tax payers statutory obligation to do so. Certainly in the Magistrates Court and in this court all submissions have addressed only the charge of failing to file the tax returns.

In all these circumstances I intend to increase the fines by applying a daily rate of $4.00 for the default in filing tax returns. That is only 10% of the maximum prescribed. It is little enough for default for over 3 years in complying with the notice, particularly as it is to be imposed for a period of 180 days only. In respect of the other two lesser charges, the daily rate will be $1.50.

The appellant also appealed against the failure of the Magistrate to make any order for costs against the Respondent. I agree that the history of the proceedings in the Magistrates Court provide ample reason for an award of substantial costs pursuant to Section 158 of the Criminal Procedure Code. However I was advised from the bar that the practice in the Suva Magistrates Court is only to award costs if they are asked for. If no application is made, then no costs are given. In these circumstances I could not say that the Magistrate wrongly exercised his discretion in failing to award costs. In accordance with the practice, the question just did not arise.

Accordingly I make the following orders.

1. On the charge of default in filing tax returns, the appeal against the sentence in the Magistrates Court of a fine of $1.00 per day for 180 days is allowed; the fine of $1.00 per day is quashed and a fine of $4.00 per day is substituted.
   
2. On the charges of default in providing statements of assets and liabilities and providing analyses of drawings the appeal against the sentences in the Magistrates Court of a fine of $1.00 per day for 180 days is allowed. The fine of $1.00 per day on each charge is quashed and a fine of $1.50 per day is substituted.
   
3. The Respondent is given two months to pay these total fines of $1,260.00.
   
4. The appeal against the failure of the Magistrate to make an order for costs is dismissed.
   

JUSTICE D.B. PAIN

HAA0012D.94S