IN THE HIGH COURT OF FIJI ISLANDS
AT SUVA
CIVIL JURISDICTION

Civil Action No: HBC 276 of 2009

BETWEEN:

CHEN YUJIN
1st Plaintiff

AND:

RED FLOWER (FIJI) CIGARETTE CO. LTD
2nd Plaintiff

AND:

FIJI ISLAND REVENUE & CUSTOMS AUTHORITY
Defendant

Counsel: Mr. Iqbal Khan & Associates for the Plaintiffs.
Ms. I. Ratuvuku for the Defendant.

Date of Judgment: 19th August, 2011

JUDGMENT

1. The plaintiff by way of a Notice of Motion sought following orders:

a. That the defendant does release the sum of $63716.14 being VAT refund held by the defendant to the plaintiff and/or to her Solicitors Trust Account. 

b. That the time of service of this motion by acknowledged. 

c. Any other order or orders this court deems just.

d. Costs. 

2. In support of the motion the 1st plaintiff filed an affidavit. 

3. The facts of the affidavit can be summarized as follows:

4. The 1st plaintiff operated a business in Fiji under the name of Red Flower [Fiji] Cigarette Company Ltd (hereinafter referred to as the Company). 

5. The 1st plaintiff was registered with the defendant for VAT purposes and the company was issued a VAT reference number VAT/ 14554-0-4/OPS. 

6. The 1st plaintiff as the director of the 2nd plaintiff company continued to pay VAT.

7. The 1st plaintiff alleges that the defendant is holding the sum of $63716.14 being refund of VAT to the company. 

8. It is further deposed that the defendant is not releasing the said sum on the belief that there was a winding up order made against the company.

9. The 1st plaintiff states that all the moneys that were owed by company were paid to the creditors and therefore, the Winding Up petition was discontinued. 

10. It is further stated that upon the advice of the Official Receiver the Master of the High Court made an order that the balance sum of $228452.75 was to be paid to the 1st plaintiff. 

11. The plaintiff contends that since the court has released all monies held by it, defendant should not hold the company's VAT refund without any cause. 

12. It is further stated that when enquired from the defendant, the plaintiff was advised that the defendant would release the money upon receipt of the Court Order.

13. In response to the plaintiff's affidavit an affidavit was filed by Mohammed Isamil, Acting Team Leader of the VAT Review Term. 

14. In that affidavit it is deposed that the company has been wound up by action no. 107 of 2006.

15. A copy of Winding Up order marked as "FIRCA" is annexed to the affidavit.

16. It is further stated that, the Foreign Investment Certificate issued to the plaintiff by FTIB was cancelled on 6.7.2006. 

17. Furthermore, it is stated that the cigarettes and tobacco are excisable goods and thereby require the approval by the defendant. The defendant on 14.8.2006 withdrew its approval that was granted earlier on 19.8.2005 for manufacturing cigarettes.

18. Further, the plaintiff was ordered to re-export all the machinery imported for the manufacture of excisable goods. 

19. It is important to note that there has been no VAT lodgment by the plaintiff since July 2006. 

20. The defendant further states that there has been no sale or output tax recorded by the company and only VAT they have paid is the VAT import on duty they paid the customs for the importations of machinery. 

21. Since no taxable activity carried out by the plaintiff company, the defendant states that the company is not eligible for refund. 

22. The main issue to be determined here is whether the company is entitled to have VAT refund. 

23. The defendant's position is that at present the plaintiff is not carrying out a taxable activity, the plaintiff has already been paid VAT refund on importation of machinery and therefore is not entitled to a tax refund. 

24. Therefore, it is incumbent on the plaintiff to prove that the company carried out a taxable activity during the relevant period.

25. The documents "FIRCA 3" and "FIRCA 4" attached to the affidavit of Mohammed Ismail clearly show that the Foreign Investment Certificate and the approval granted to the company had been cancelled. 

26. Therefore, the plaintiff cannot claim that he was engaged in a taxable activity. 

27. The term taxable activity is defined in Section 4 of the VAT Decree as follows:

1. For the purpose of this decree, the term 'taxable activity' means-

a. Any activity which is carried on continuously or regularly by any person, whether or not for pecuniary profit, and involves or intended to involve, in whole or in part, the supply of goods and services to another person for a consideration; and includes any such activity carried on in the form of a business, services, trade, manufacture, profession, vocation, association, or club; and 

b. Without limiting the generality of paragraph (a) of this sub section, the activities of any local authority or public authority.

28. Merely because a person has registered a business under the FIRCA and has registered for VAT is not indicative of carrying out a taxable activity. 

29. Consequent to the cancellation of the certificate from the Fiji Trade and Investment Board the company cannot in fact carry out any business legally. 

30. The document FIRCA 5 shows that there has been no sale or output tax recorded by the company, and also no VAT lodgment by the plaintiff since July 2006, which evinces that the company is not entitled to any VAT refund since it was not engaged in taxable activity. 

31. The plaintiff has not filed any affidavit in reply to the defendant's affidavit. Upon considering the affidavit evidence before me I find that the plaintiff has failed to establish that the company was engaged in any taxable activity as defined in section 4 of the VAT Decree.

32. Therefore, I dismiss the plaintiff's Notice of Motion.

33. Costs is summarily assessed in the sum of $ 500.00.

Pradeep Hettiarachchi
JUDGE

19.8.11