IN THE TAX COURT
(HIGH COURT)
AT SUVA, FIJI ISLANDS

Appeal No. HBT 7 of 2013

IN THE MATTER of the Tax Administration Decree and the Income Tax Act 1974.

AND IN THE MATTER of an Appeal pursuant to Section 18 and 107 of the Tax Administration Decree 2009 against the decision of the Tax Tribunal made on 24 September in Miscellaneous Action (Tax) No. 01 of 2013.

BETWEEN:

LOGAN LIMITED (COMPANY) having its registered office at Jay Lal & Co., 21 Tui Street, Lautoka
Appellant

AND:

FIJI REVENUE & CUSTOMS AUTHORITY, a body corporate duly established pursuant to Fiji Islands Revenue & Customs Act 1998
Respondent

Appearance: Solanki B of Solanki Lawyers for the Appellant
 Malani R, Legal Officer, FIRCA for the Respondent

Date of Judgment: 24th October 2014

JUDGMENT

1. The Appellant filed Notice and Grounds of Appeal on 17 October 2013 and sought the following Orders:

 (1) An Order that this Appeal be allowed.

 (2) An Order that enlargement/extension of time be granted to the Appellant to file an Application for Review in the Tax Tribunal within 14 days after such order is made.

 (3) Any other order this court deems fit.

2. The Grounds of Appeal urged are as follows:

 (a) he failed to properly apply the tests and or principles for extension of time to the Application for Extension of time before him;

 (b) he wrongly (at paragraphs 11) took into consideration matters which were not before the Tribunal, in particular, there was no evidence before the Tribunal that the Respondent was impacted or prejudiced in any way by the delay as the Respondent did not file an Affidavit in opposition to the Affidavit of Pauline Baledrokadroka;

 (c) he wrongly proceeded to make a determination on the merits of the proposed Application for Review (at paragraphs 27 to 30 of his decision) by rejecting the Appellants constructions of Section 8 (2) (a) (aa) of the Income Tax Act 1974.

 (d) he wrongly proceeded to make a determination on the merits of the proposed Application for Review (at paragraphs 31 to 32 of his decision) by rejecting the Appellants constructions of Section 8 (2) (a) (aa) of the Income Tax Act 1974;

 (e) in stating (at paragraph 31 of the decision) that the Appellant failed to make submissions on whether the Appellant Directors have made a decision to wind up the Company or whether or not they have thereafter complied with the relevant requirement of Part VI of the Companies Act, he took into consideration matters which were not relevant for the determination of an Application for Extension of Time;

 (f) in stating (at paragraph 32) that the primary issue for statutory interpretation is this. Are the total credit sales of the Tax Payer, to be regarded as being: "an(y) amount distributed by a Company whether carrying on business in Fiji or not to its shareholders"-? he was wrongly determining the merits of the proposed Application for Review;

 (g) he wrongly proceeded (at paragraphs 35 to 37 and 43 of the decision) to make a determination in respect of the write off of the Appellant's credit sales and the interpretation of Section 8 (2) (a) of the Income Tax Act 1974 when that was a matter not to be determined in an Application for Extension of Time;

 (h) in stating (at paragraph 42) that the Applicant has failed to explain in any detail, why it has written off $2.3 million of possible profits to its related entitled, he took into consideration matters which were not relevant to the determination of an Application for Extension of Time;

 (i) in stating (at paragraph 42 of the decision) that Section 21 of the Tax Administration Decree 2009 imposes a burden on the tax payer to prove the assessment is excessive, he took into consideration matters which were not relevant to the determination of the Application for Extension of Time; 

 (j) further to (i) above, in stating (at paragraph 42 of the decision) that Section 21 of the Tax Administration Decree 2009 imposes a burden on the tax payer to prove the assessment is excessive, he applied the wrong burden of proof in determining the Application for Extension of Time;

 (k) he failed to consider what was in the interest of justice when he refused the Application for Extension of Time;

 (l) Such further or other additional grounds as the Appellant may give notice of.

3. At the hearing of the application, both parties made their oral submissions and tendered the written submissions.

4. Facts
 4.1 The Respondent FRCA had raised an audit on the applicant in 2011.

 4.2 On conclusion of the audit, the Respondent by the letter dated 2 February 2012 informed the Appellant to pay $348,936.60.

 4.3 The Appellant objected to assessment on 1 March 2012 (Page 10 of the Copy Record).

 4.4 On 25 April 2012 informed the Appellant the objection was disallowed.

 4.5 Again on 28 September 2012 the Respondent informed that the objection was disallowed and further stated the Appellant could lodge any appeal within 30 consecutive days pursuant to Section 17 of the Tax Administration Decree. Further it was stated in the said letter the Appellant is required to serve a copy of the application to the Respondent's CEO within 5 days of his application.

 4.6 The Appellant's Director Ms Baledrokadroka had met one Mohammed Rizwan who was supposed to be a former employee of the Respondent to assist the Appellant's claims. Ms Baledrokadroka returned to Australia in January 2013.

 4.7 The Appellant claimed that an appeal was lodged with the Tax Tribunal on 4 March 2013 (Page 19 of the Copy Record).

 4.8 The said Mohammed Rizwan had sent a Gmail on 14 January 2013 and had sought the signature of John Brew to sign on last page of the document dated 4/3/2013 (Page 53 of the Copy Record).

 4.9 The Appellant sought the advice from present solicitors in mid April 2013 and the solicitor checked with the Tribunal and informed the Appellant there was no such appeal before the Tribunal coming up on 24 April 2014.

 4.10 The present solicitors filed an application for extension of time dated 28 June 2013 and was issued on 2 July 2013.

 4.11 The said application was heard by the Learned Tribunal on 11 September 2011 and decision was made on 23 September 20134 refusing the application.

5. Analysis and Determination
 5.1 It is the task of this court to decide as to whether the Learned Tribunal adopted the principles governing extension of time for an Appeal.

 5.2 Section 82 of the Tax Administration Decree outlines the procedure to be followed by a Tax Payer on refusal of the objection by the Tax Authority. Section 82 states:

 "82 – (1) A person dissatisfied with a reviewable decision may apply to the Tax Tribunal for review of the decision.

 (2) An application under sub section (1) must –

 (a) be in the approved form;

 (b) include a statement of the reasons for the application;

 (c) be lodged with the Tax Tribunal within 30 consecutive days after the applicant has been served with notice of the reviewable decision; and

 (d) be accompanied by the prescribed fee.

 (3) The Tax Tribunal may, on an application in writing, extend the time for making an application to the Tribunal for a review of a reviewable decision.

 (4) An applicant to the Tax Tribunal must serve a copy of the application, on the CEO or the Tax Agent's Board, as the case may be, within 5 consecutive days of lodging the application with the Tribunal

 (5) ………………………………".

 5.3 In applying the provisions of the Section 82(2) (2) (c) and objection decision was informed to the Appellant on 28 September 2012. The Notice of Motion for enlargement of time was filed after 271 days of the objection decision.

 5.4 The issue to be decided in this matter is as to whether the Tax Tribunal's decision dated 24 September 2013 refusing to grant extension of time is justifiable.

 5.5 It is the duty of this court to determine whether the Tribunal had correctly applied the principles to grant leave for extension of time:

 (1) The reasons for delay;

 (2) The length of delay;

 (3) Prejudice to the Respondent;

 (4) Merits of the application.

 5.6 The Reason for Delay and Length of Delay
 The Appellant had submitted in case of Norwich Peterbrough Building Society vs. Steed (1991) 2 ALL ER 888 which was cited in Fiji Court of Appeal case Deo Maharaj vs. Burns Philip (South Seas) Company Limited (unreported) Civil Appeal No. ABU 0051 of 1994S the above principles were stated in considering extension of time. As submitted, I agree that wide and unfettered discretion is given to the courts in this regard. However, such discretion should be exercised in consideration of the facts of each and every case. Such discretion cannot be exercised, the delay is not justified. The reason for the delay in this case is that one Rizwan was entrusted with the carriage with the matter who had not attended to it, within the stipulated time. The Appellant is a company who engaged in Export Business. Although, they have stopped the manufacturing business the premises was rented out and the company was in operation. The paragraph 16 and 17 of the Affidavit filed on 2 July 2013 stated:

 "16. Later in April 2013, we engaged the legal services of Toganivalu Barristers and Solicitors of Toorak, Suva and we were attended to by Mr Bhupendra Solanki. After he had spoken to the court clerk at Tax Tribunal, that there was in fact no appeal or submission lodged by Mr Rizwan or AK Lawyers and also that the matter was not listed for hearing in the Tax Tribunal on 24 April 2013. I was shocked and dismayed to hear of this as it was now clear to me and John Bream that we have been misled by Mr Rizwan and that he had not done what we had requested him to do so, which was the filing of an appeal to the Tax Tribunal on behalf of Logan.

 17. We then sought further advice from Mr Solanki on the merits of any appeal now and the possibility of lodging an appeal "out of time". Upon receipts of his advice, we how proceed by way of this application to seek the necessary Orders which, if granted, will allow Logan to properly appeal against the decision of the Respondent dated 28 September 2012."
 
 The statements made in the above two paragraphs, shows the Appellant was aware that there was no application before the Tribunal for Review in mid April 2013. Finally, the Application for enlargement of time was filed before the Tribunal on 28 June 2013 which was approximately two and half months from April 2013.

 5.7 I further find that the Tax Payer would have made an application for review within 30 days from the objection decision made on 28 September 2012. The application for review should have been filed before 28 October 2012. The Appellant alleged Rizwan had acted fraudulently and collected monies from the Appellant. The Appellant would have acted diligently and cautiously. It is the duty of the Appellant to follow up with Rizwan. I agree with the findings of the Learned Tribunal stated in paragraph 4 of its decision. The reasons for the delay and length of delay are not justifiable and the court cannot use its discretion in favour of the Appellant if not great prejudice will be caused to the Respondent. To substantiate my determination I quote from Gatti vs. Shoosmith [1939] ALL ER 916 at 917 it was held:

 "Under the rule as it now stands, the fact that the omission to appeal in due time was due to a mistake on the part of a legal adviser, may be a sufficient cause to justify the court in exercising its discretion. I say 'may be' because it is not to be thought that it will necessarily be exercised in every set of facts. Under the law as it was conceived to be before the amendment, such a mistake was considered to be in no circumstances a sufficient ground. What I venture to think is the proper rule which this court must follow is: that there is nothing in the nature of such a mistake to exclude it from being a proper ground for allowing the appeal to be effective though out of time; and whether the matter shall be so treated must depend upon the facts of each individual case. There may be facts in a case which would make it unjust to allow the Appellant to succeed upon that argument. The discretion of the court being, as I conceive it, a perfectly free one, the only question is whether, upon the facts of this particular case, that discretion should be exercised." (emphasis mine)
 
 I also quote from the Privy Council decision in Ratnam vs. Cumaraswamy [1964] 3 ALL ER 933 at 935:

 "The Rules of Court must, prima facie, be obeyed, and, in order to justify a court in extending the time during which some 'step' in procedure requires to be taken, there must be some material on which the court can exercise its discretion. If the Law were otherwise a party in breach would have an unqualified right to an extension of time which would defeat the purpose of the rules which is to provide a time table for the conduct of the litigation."
 
 It was also stated in the case of Pickering vs. Deputy Commissioner of Taxation (1999) 42 ATR 709:

 "The fact that a matter is left in the hands of another (i.e. financial advisor) is not a reasonable explanation for delay………" 

 In this case there was a long delay of 271 days from the objection decision. The Appellant's Directors are well aware of the consequences of the repercussion in case of their default. The Appellant had engaged a service of an advisor and no follow up was done. The default by the Appellant caused prejudice to the Respondent and it is in violation of Section 82 (2) (2) (c) of the Tax Administration Decree. The Respondent in its letter dated 28 September 2012 had stated that within 30 days the review application to be made and the Appellant had not taken any notice of it and putting the blame on tax advisor which cannot be accepted by this court. I concur with the Learned Tribunal's determination that the Length of Delay and reason for delay do not warrant to exercise the discretion of the court in this matter.
 
 To support my determination I cite the statement made in Fiji Court of Appeal Judgment, Latchmi and Another v. Moli and Others 10 FLR page 138 at p. 147:

 "………Even the faulty application was made to a Judge of the Supreme Court for an extension of time was not filed until 23 days after the expiry of that period. There are no circumstances present in this case such as absence in America of the Appellant referred to in Kavorkin v. Burney (Supra) or the giving of notice to Respondent's solicitors within the proper time and very short period of delay involved in Gatti v. Shoosmith (Supra). It is true that every application of this nature must be determined on its own facts; but a careful study of the facts of this case disclose, in my view, no real basis for the exercise of the courts discretion in the applicant's favour." (emphasis mine)

6. Prejudice caused to the Respondent
 6.1 On this issue Learned Tribunal in the paragraph 12 of its decision had stated (Copy Record page 84)

 "12. – Since the Respondent has not filed any Affidavit in Reply, there are no factual materials before the Tribunal to show whether the Respondent will be impacted or suffer prejudice if this application is granted. Nevertheless, the Applicant says that pursuant to Section 21(3) of the Tax Administration Decree 2009, an objection or appeal does operates as a stay of recovery of taxes and the Respondent is not encumbered from proceeding with its debt recovery actions if the extension of time is granted by this Tribunal. Therefore, there is no prejudice caused to the Respondent. Furthermore, the Respondent would have maintained tax files relating to the Applicant and they would be capable of putting a defence to any appeal that would be lodged by the Applicant considering that the delay is only 8 months."
 
 There is no Affidavit filed by the Respondent in Response. However, the Appellant had stated in its submissions filed in the Tribunal that pursuant to Section 21(3) of the Tax Administration Decree 2009 an objection or appeal does not operate as a stay of recovery of taxes and such an appeal is not an encumbrance to debt recovery action by the Appellant. Having stated that before the Tribunal the Appellant had obtained an Interim Order against the Recovery action filed by the Respondent in Case No. HBC 127 of 2014. In fact, the Appellant's conduct is questionable on the said position, non disclosure in the said case and the Appellant had misrepresented the facts. By obtaining the said Order in Case No. HBC 127 of 2014, great prejudice is being caused to the Respondent by delaying the recovery action. The Appellant's conduct does not warrant any redress from this court. 

 In the Affidavit dated 18 June 2014 filed on the same day it was stated in the paragraph 24:

 "24. Also if the Order is granted to sell the property and if the same is sold before a judgment is delivered, it would be extremely prejudicial to the Respondent in the event the judgment was favorable to the Respondent. In that case, Logan would not be able to recover the said property once it is sold to a third party."

 This position is contrary to the submissions made in the Tribunal (Refer paragraph 12 of the written submissions filed by the Appellant and paragraph 12 of the Decision of the Tribunal). The Appellant's intentions are clearly established that is to delay the recovery action which is prejudicial to the Respondent. 

7. Merits of the Case
 7.1 The Learned Tribunal had extensively dealt with the merits of the application of the Appellant (paragraph 12 to 37 of the decision). The Appellant's argument that the Tribunal had not paid attention to the interpretation and applicability of the Sections in the Tax Administration Decree. In fact it was not necessary for the reason that the Appellant could not justify the reasons for delay, length of delay and the prejudice caused to the Respondent.

 7.2 The stipulated time periods in the Tax Laws for the Taxpayers should be strictly complied with. Tax Laws are administered to ensure inter alia, that tax revenue is collected on time, bearing in mind that a shortfall in revenue or delays in collection will have an impact on the timelines of the financial resources available to the government. The financial resources are to provide services and facilities to improve the quality of life of all the citizens. All these aspects should be taken into consideration by the court when granting of an extension of time to appeal. 

 7.3 The efficient recovery of taxes by the country is extremely necessary for the development of the economic and social standards of the people. Effective tax recovery systems benefit the public at large. The Legislatures intention by granting the taxpayer prescribed period of time to review the decisions of the Tax Authority to collect the taxes expediously and not to delay the debt recovery. When the taxpayer does not adhere to the directions of timelines, appealing for extension of time should be considered on limited scope and the discretion of the court to grant such extension should be used sparingly; and on extremely reasonable grounds which had not established in this case.

 7.3 Accordingly, I make the following Orders:

 (1) Notice of Motion filed on 17 October 2013 dismissed.

 (2) The Appellant should pay $2,500.00 summarily assessed costs to the Respondent within 30 days of this Judgment.

Delivered at Suva this 24th Day of October 2014.

C. Kotigalage
JUDGE