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Taxpayer R v Fiji Revenue and Customs Authority [2015] FJTT 5; Action 12.2014 (24 September 2015)

FIJI TAX TRIBUNAL

Decision

Section 89 Tax Administration Decree 2009

VALUE ADDED TAX DECREE 1991 -Imposition of Tax on Supply-Section 15(1); Implications of unexplained wealth and proceeds attributable to taxation. Section 21(1)(a) Burden on Taxpayer to Discharge Obligation re Excessive Assessment; Money Lending Act (Cap 234); Second Hand Dealers Act (Cap 238).

Background

1. The Applicant Taxpayer is registered for Value Added Tax (VAT) purposes in accordance with Section 22 of the Value Added Tax Decree 1991. According to the Statement of Agreed Facts filed by the parties[1]:-
   
   • On 20 February 2014, the Respondent issued a VAT assessment against the Applicant for the December 2013 financial reporting period;
     
   • A further Amended Assessment was issued against the Taxpayer on 17 March 2014, following a discovery by the Respondent that Mr R, the Taxpayer had been in possession of a substantial amount of cash and other goods that did not appear to feature within the Taxpayer’s sales or income returns during the relevant period.[2]
     
   • On 19 April 2014, the Taxpayer lodged his objection in relation to the Amended VAT Assessment. On 16 September 2014, the Respondent provided its Objection Decision, which while having the effect of reducing in part the amended assessment made, still required the payment of $27,703.84 in outstanding tax.
     
2. It is against that decision that the application for review dated 8 October 2014 is made. The application is heard in accordance with the relevant provisions of the Tax Administration Decree 2009 and the Magistrates Court (Amendment) Decree 2011.
   

The Taxpayer

3. The Taxpayer was the first person to give evidence in proceedings. Mr R, described himself as a licenced money lender, real estate owner and pawnshop[3] business owner. He is a former parliamentary member of the government of Fiji. Mr R indicated that he resides in a rural community and likes to ‘give back’ to that community. According to the Taxpayer, his shop is adjacent to his home residence and a burglary took place at his residence on 20 August 2013. Documents provided to the Tribunal and marked for identification purposes as ‘Documents A’, were submitted by Counsel as an account of the events that transpired as a consequence of that burglary. [4]
   
4. What followed from the burglary was that the Respondent wrote to the Taxpayer by letter dated 4 September 2013, noting that property to the value of $316,780 had been stolen from his home. That property was made up of:
   
   1. $127,180.00 cash;
   2. 70 tabua (whale teeth) valued at $35,000
   100. Assorted jewellery $60,600.00; and
   4. A Hilux Twin Cab Vehicle valued at $94,000.00.
      
5. What the Respondent sought to understand, was how these items and money were acquired, presumably so as to ascertain whether or not they have been assessed as part of Mr R’s income or business sales, for the purposes of the Income Tax Act (Cap 201) and the Value Added Tax Decree 1991.
   
6. Ultimately the jewellery and the motor vehicle were excluded from any further assessment, though insofar as the quantity of cash and tabua remained matters of contention, the Taxpayer explained their presence in his home at that time, in the following way. In relation to the cash, he said that he stored some monies from an ANZ bank account that received his parliamentary allowances[5] and pension monies, so as to later distribute gifts and assistance to the various villages and organisations in his community, in the form of cash donations. Essentially his evidence was that as these people had elected him into political office, that he believed that he should share that money with them. According to the Taxpayer, “it was the people’s money”. Mr R suggested that on occasions if he was the chief guest at a church, for example, he would perhaps give a donation of $5,000 from these funds. The Taxpayer said that the ANZ account was distinct from that of the business account that he held with the Bank of Baroda.[6]
   
7. In relation to the tabua, the Taxpayer said that these (70 of them) were kept in his bedroom at home and were part of his inheritance passed on from his grandfather to his father, then to him. [7]
   
8. Counsel for the Applicant Mr Nagin, then asked the Taxpayer to explain what information he provided to the auditor in response to the request for information. The Taxpayer stated that in relation to the Hilux Twin Cab, that this was obtained from a Merchant Bank of Fiji and purchased through a bank loan. In relation to the jewellery, this had been included within the Respondent’s initial assessment, though later excluded based on information provided to the Authority. Folios 2 to 7 of Document A, set out the details of parliamentary retirement allowances he received from 2006 to 2013. Folio 8 of the Document set out a list of cash withdrawals from 31 October 2005 to 2 July 2013, equating to a withdrawal sum of $210,199.74. [8] The Taxpayer stated that these included a sitting allowance and allowance for travel that were not taxable, yet did not provide any information as to what the quantum of those allowances were. [9]
   
9. Under cross examination by Ms Lemaki, the Taxpayer was challenged in relation to the large cash amount held on his premises as well as the number of tabua. It was put to Mr R that the large quantity of tabua, related to his conduct of a money lending business.[10] He denied that suggestion. The Taxpayer was also asked about a previous penalty that was imposed on him by the Authority following an audit of his 2012 VAT Returns. The witness said that he could not recall that issue.[11]
   
10. In relation to the cash reserves, it was put to the witness that the pension he received in the period from 2006 to 2013 did not amount to $127,000.00[12]. In response, the witness said that the monies included salaries and allowances received from 1996 to 2006. Mr R was not able to tell though whether he had provided the Respondent’s Auditors with any details of those salaries and allowances. The witness refuted the suggestion that the tabua he had, were part of the sales from the money lending business[13], yet accepted that he held no documentation determining the circumstances in which he received them.
    

Ratu D

11. The only other witness for the Applicant, was Mr Ratu D, who advised the Tribunal that he was a village chief from the district in which the Taxpayer resided. Ratu D gave evidence that he had known Mr R for a very long time and went to his house before the burglary in 2013. He said that he saw tabua in a cupboard in the residence. Mr D claimed that he had known the grandfather and father of the Taxpayer, though didn’t see the passing of any of the tabua to them. When asked whom he understood Mr R had received these tabua from, he responded, “at the time of Minister, he use to get tabua”. The witness did not say however that he had personally witnessed any of that gifting.
    
12. The Tribunal then asked the witness to clarify how it was the case that he had seen the tabua in the bedroom of the Taxpayer. According to the witness he saw the tabua while undertaking cleaning tasks in the home. He said that on one occasion the bedroom cupboard in which they were housed, was partly ajar and he estimated that there were approximately 80 to 100 tabua inside.
    

The Case of the Respondent

13. The first witness called by the Respondent, was Mr Adriu Fifita. Mr Fifita indicated that he was the auditor responsible for detecting and investigating the discrepancy within the VAT return for the relevant period. According to Mr Fifita, following his meeting with the Taxpayer, he was provided with no supporting documentation to justify the Taxpayer’s claims in relation to the acquisition of the tabua or jewellery.[14] Mr Fifita advised the Tribunal that this was the second occasion where the Taxpayer had been penalised for an offence under the Tax Administration Decree 2009.
    
14. Under cross examination, Mr Fifita indicated that the Respondent had treated the cash stolen from the residence as being monies attributed to sales and therefore amendable to taxation. He nonetheless indicated that he was not aware that documentation would be required had loan agreements for that money been in place.
    
15. Mr Nagin took the witness to Folio 8 within the ‘Documents Marked For Identification A’, in which the cash withdrawals identified by the Taxpayer were set out. Despite being shown that material, the witness indicated that he maintained the view that the identified cash sum, would have appeared to come from business sales. The witness further conceded that he did not go to the taxpayer’s residence as part of the audit process, nor did he identify where the tabua were housed. The witness admitted not specifically knowing where the $127,180.00 had come from and did not know where the tabua had come from. The witness rejected the notion that so many tabua could have been passed down to the taxpayer in the way he had described.
    
16. On re-examination, the witness indicated that he had provided the taxpayer with the opportunity to provide documentation in relation to interest received as part of the money lending business, proceeds from the pawn shop and rental income. According to the witness, no such documentation was provided.
    
17. The second witness called by the Respondent was Mr Pio Gabirieli. According to Mr Gabirieli, he was responsible for the review of the internal audit that had been undertaken. Mr Gabirieli advised the Tribunal that on 9 April 2014, by letter he requested documents from the Taxpayer pertaining to his pension income. He restated the absence of any supporting documentation, relating to the ‘gifting’ of the tabua. Mr Gabirieli confirmed that while the jewellery that was also included within the scope of the inquiry, was ultimately excluded from any further assessment, the tabua and cash were not, as there was insufficient evidence to support the claims being made by the Taxpayer.[15] In relation to the sum of approximately $127,000.00 that was identified as unexplained wealth, Mr Gabirieli stated that based on the documentation provided by the Taxpayer that only approximately $60,000 had been accounted for within the pension income.[16]
    
18. During cross examination, it was put to the witness that it could have been possible that the Taxpayer did not spend all of the $210,199.74 identified within the documents provided, thereby explaining why he held the remaining sum of $127,000.00. The witness accepted that proposition. The witness also accepted that it would not have been the case for any documentary material to have ordinarily been associated with the ‘gifting’ of tabua. In relation to the businesses that were alleged by the Respondent to be the source of these funds and tabua, the witness admitted that the Taxpayer had indicated that while he held licences for them, they were not operating. In response to whether there was any evidence of any money lending activity, Mr Gabirieli stated, that he did not go to the premises other than for an interview. It was also put to the witness that value added tax would not be paid on loan interest in any event. The witness did not accept or reject that proposition.
    

The Scope and Purpose of the VAT Decree

19. It is acknowledged by Counsel for the Taxpayer, that Section 21(1)(a) of the Tax Administration Decree 2009, sets out the onus to be discharged where in the case of a tax assessment, the burden is on the taxpayer to prove that the assessment is excessive.
    
20. To commence the analysis, it is useful to consider the regulatory framework that governs how value added taxation is assessed. As previously indicated in this Tribunal, the judgment of the High Court decision of Punjas Ltd v Commissioner of Inland Revenue sets out a good understanding of the scheme.[17] Section 2 of the Decree defines “taxable supply” to mean any supply of goods and services which is charged with tax pursuant to Section 15 of this Decree. The definition of the meaning of “supply” is provided at Section 3. Specifically Section 3(1) states:
    

For the purposes of this Decree, the term ―supply includes all forms of supply and without limiting the generality of the term has the same meaning as in section 2 of the Sale of Goods Act, Cap. 230.

21. The Sale of Goods Act defines the term as follows:
    

"supply", when used as a verb, includes-

(a) in relation to goods - the supply by way of sale, exchange, lease, hire or hire purchase; and

(b) in relation to services - provide, render, grant or confer and when used as n has a corresponding meaning.

22. Section 15(1) in turn determines the rate of taxation, as well as why the taxation is imposed, as follows:
    

Subject to the provisions of this Decree, the tax shall be charged in accordance with the provisions of this Decree at the rate of fifteen percent on the supply (but not including an exempt supply) in Fiji of goods and services on or after the 1st day of July 1992, by a registered person in the course or furtherance of a taxable activity carried on by that person, by reference to the value of that supply.

23. The definition of “taxable activity” is provided for at Section 4 of the Decree.
    
    • (1) For the purposes 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 is 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 subsection, the

activities of any local authority or public authority.

(1) Anything done in the commencement or termination of a taxable activity shall be deemed to be carried out in the course or furtherance of that taxable activity.

24. A registered person gains that status by virtue of Section 22 of the Decree.
    

What is the Taxable Activity To Which The Taxpayer Was Registered?

25. Based on the submissions of the Respondent, it is claimed that the taxable activity of the Taxpayer includes money lending and ‘pawn shop’ activities.[18] Once registered, it is incumbent upon the registered person (the Taxpayer) to notify the Commissioner in writing within twenty-one days of
    

any changes in the name, address, constitution or nature of the principal taxable activity or activities of that registered person;[19]

26. There is no material before the Tribunal to suggest that the registration of the taxpayer does not record those activities as being ones in which he is involved, nor that he has notified of any ceasing of trade.
    

What Were the Services Alleged to be Supplied?

27. The allegation is that the Taxpayer has been involved in the supply of money lending services and in the dealing of second hand goods. Insofar as the issue of money lending is concerned, the activity is regulated by the Moneylenders Act (Cap 234). Section 2 of the Act defines “money lender” to
    

include(s) every person whose business is that of money lending or who carries on or advertises or announces himself or holds himself out in any way as carrying on that business whether or not that person also possesses or earns property or money derived from sources other than the lending of money and whether or not that person carries on the business a principal or as an agent but does not include –

(a) anybody corporate incorporated or empowered by any written law or Imperial enactment to lend money in accordance with such law or enactment; or

(Substituted by 13 of 1997, s. 13.)

(b) any person bona fide carrying on the business of banking or insurance or bona fide carrying on any business not having for its primary object the lending of money in the course of which and for the purposes whereof he lends money at a rate of interest not exceeding ten per cent per annum; or

(c) any pawnbroker licensed under the provisions of the Second Hand Dealers Act; or
(Cap. 238)

(d) any body corporate for the time being exempted by the Minister from the provisions of this Act;

28. Under Section 2 of the Second Hand Dealers Act (Cap 238), the term dealer is defined to mean,
    

any person who keeps a shop, yard or other establishment for the purpose of dealing in, buying or selling second-hand goods, and includes a pawn broker;

29. The allegation made by the Respondent is that the sum of $127,180.00 and the 70 tabua were the proceeds of the money lending and second hand dealing business. Yet there is no quantification of which activity and in what proportion these have attributed to the generation of cash or the accessing of the tabua. Section 18 of the Moneylenders Act requires that every money lender must keep a record of each loan entered in a permanent book. It is understood that despite a request being made by the Respondent for the production of records,[20] none were forthcoming. Despite the suggestion of Mr Nagin, that the "interest" arising out of money lending would not be amenable to value added taxation, it remains the case that the Respondent is entitled to expect co-operation by the Taxpayer in the provision of records, consistent with the combined provisions that are Section 34 of the Tax Administration Decree 2009 and Section 79 of the Value Added Tax Decree 1991.
    

Is Moneylending Caught by the VAT Decree?

30. While the Applicant has not specifically addressed the scope of the power to tax money lending services within its submissions, it is nonetheless noted by the Tribunal that the First Schedule to the Decree, does make provision for the exclusion of certain financial services. That provision is reproduced in its entirety as follows:
    

The supply of financial services, where that supply is not a zero-rated supply in terms of the Second Schedule to this Decree consisting of -

(a) banking services such as the issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money and the operation of any current, deposit, or savings account;

(b) a supply, including a transfer, assignment, or surrender, of a contract of insurance, to the extent that the insurance is—

(i) life insurance;

(ii) medical insurance;

(iii) indemnity payments of insurance against loss of earnings, being earnings within

the meaning of the Workmen's Compensation Act (Cap.94) or the Motor Vehicle

(Third Party Insurance Act) (Cap.177); or

(iv) Indemnity payments of insurance against accidental personal injury or damages.

provided any premiums paid for any contract of insurance in relation to sub paragraphs (iii) and (iv) shall not be exempted under this schedule and is a supply under section 15.

(c) the issue, transfer or receipt of, or dealing with, any stocks, shares, debentures and other securities; including the underwriting or sub-underwriting of such securities;

(d) the making of any advance or the granting of credit;

(e) the granting of, or any dealing in, credit guarantees or other security for money and the management of credit guarantees by the person who granted the credit;

(f) the provision, or transfer of ownership, of an interest in a superannuation scheme, or the management of a superannuation scheme; and

(g) agreeing to do, or arranging any of the services specified in the above subparagraphs, other than advising thereon.

31. It would seem clear that you cannot charge tax on the supply of credit. Whether that interest presumably arrived at in consequence of that credit, is subject to income tax, is another issue.
    

Is Dealing in Second Hand Goods?

32. Section 8 of the Second Hand Dealers Act (Cap 238) requires that a licensed dealer needs to maintain a register in relation to all goods acquired. More specifically though, Section 20(3) of the Value Added Tax Decree 1991, requires that a registered person who is a dealer in second hand goods must maintain sufficient records to enable the following particulars to be ascertained:-
    
    • (a) the name and address of the supplier:
    • (b) the date upon which the secondhand goods were supplied;
    • (c) a description of the goods supplied;
    • (d) the quantity or volume of the goods supplied; and
    • (e) the consideration for the supply.
      
33. The formula used to calculate the value of supply, is set out at Section 20(1) of the Decree. It allows for the deduction of any purchase price for the purposes of assessing the 'real value' of the good ultimately sold. Again it is understood that the Taxpayer simply has elected to provide the Respondent no documentation at all, that would satisfy the inquiry as to what if any, sales were recorded or undertaken during the relevant period. Of course the failure to assist the Respondent in such ways, may yield unintended consequences for the Taxpayer, if it cannot ultimately discharge its obligation to otherwise oust the evidentiary burden that it has.
    

Implication of Unexplained Wealth Law

34. There is one final matter that requires attention and that is in relation to whether any of the general principles associated with unexplained wealth law can be of any assistance when embarking upon this task of determining whether the Taxpayer has discharged its obligation for the purposes of Section 21(1)(a) of the Tax Administration Decree 2009[21] and established that the assessment was excessive.
    
35. At first blush, it appears highly unfair if the Respondent can assert the right to tax, without any further proof of activity. But this is where the 'co-operative' policy underpinnings of the law need to be understood. The short title of the Tax Administration Decree makes clear, that the purpose of the law is to ensure the efficient collection of taxes. The various requirements on the Taxpayer to make available additional information should it be required, is well set out in provisions such as Sections 3(b); 16(5); 34(1) and 36(c) of the Decree. A similar requirement is also specifically envisaged within Section 79(1) of the Value Added Tax Decree 1991. To that extent, there is an expectation within the legal framework, that the Taxpayer has a positive obligation to assist the Respondent where it can. The request for production of further documentation, whether or not this included material relating to the money lending or second hand dealing activities, was in my view a lawful request. The fact that the Taxpayer has elected not to respond to that request and provide no documentation whatsoever, is really a choice for him.[22] Whether it has any consequences though, is another matter. It is also relevant in my view that the Taxpayer had been previously issued with a penalty under Section 46 of the Tax Administration Decree, arising out of an audit conducted in 2012, in which it was found he had failed to declare rental and other income. The earlier conduct has clearly aroused the suspicions of the Respondent, in relation to this large sum of cash and the large quantity of tabua.
    
36. The Taxpayer has the onus of proof in cases of this type. If he wishes to disturb the decision of the Respondent, it would seem necessary that he does this by proving his case. It is not sufficient to argue that the Respondent was acting on insufficient evidence when making its determination.[23] What is required is for the Taxpayer to provide the evidence to disprove the basis for the determination. One would have thought that would have been a simple enough task, if it was in fact the case that there was not sufficient evidence to make a tax assessment in the manner in which the Respondent did. That is the requirement under Section 21(1)(a) of the Tax Administration Decree 2009. Yet from the Respondent's perspective, the issue of unexplained wealth and tax evasion, is one that it needs to constantly assess. In effect, it has said to the Taxpayer, you have unexplained wealth and it needs to be determined whether or not it has or should be assessed for the purposes of the Fijian tax laws. To that end and if only as a general guide to how such matters are assessed, the unexplained wealth provisions of the Proceeds of Crime Act 1997 are informative.
    
37. Under Section 71 F of that Act, unless a person provides a satisfactory explanation as to how such pecuniary resources or property came under his or her control, there is a danger of forfeiture of those assets, to the extent that a person's total wealth may exceed one's lawfully acquired wealth.[24] In some respects the principles to be applied in this case are not that dissimilar. What the Taxpayers is being invited to do, is to provide a satisfactory explanation as to where the cash and tabua came from.
    

Explanations Provided by the Taxpayer in Relation to Cash and Number of Tabua

38. As mentioned earlier, insofar as the amount of $127,180.00 cash is concerned and why it was being retained in the premises of the Taxpayer, is a matter that is not that easy to comprehend. In the first place, the amount of monies derived from the parliamentary pension as provided for within the Documents MFI 'A', fell well short of that amount. There was no other material provided in relation to any other allowances (sitting allowances or travel allowances) that were said to be paid to the Taxpayer during the relevant period. In an attempt to have corroborated the Taxpayer's account of his philanthropic nature, he relied on the testimony of only one person, who based on the impression of that witness when giving evidence, did not appear entirely objective in any event. It would have been very easy for the Taxpayer to have called additional witnesses who could have verified their specific knowledge of matters pertaining to the gifting of monies. But no such witnesses were forthcoming.
    
39. Further, the Taxpayer is now a businessperson who quite likely has a keen eye for profitable activity. Hording $127,180.00 in a residence, over an approximate seven year period seems at odds, with such an approach, even if that money was to be used for philanthropic purposes. On balance I do not accept the version of events that have been provided. It would seem more than likely that the monies have been proceeds from various ventures, presumably associated with the Taxpayer's business activities. If he is a licensed money lender and second hand dealer, then there is no reason, but more importantly no evidence to suggest that the monies did not arise out of those activities.[25]
    
40. In relation to the 70 tabua, there are many questions that arise. Firstly it is accepted that there may be no documentary evidence provided as part of the traditional gifting process. The number of 70 tabua seem nonetheless a very large quantity to be gifted. During the evidence of Mr Fifita he said that in relation to the tabua that Mr R,
    

told us where he got the tabua from. What he actually said that it came from Ratu George Cakobau then after we interviewed during the review he said that some of it came from gifts when he was a Minister for the government then. He used to go to Chief Guest to some of the villagers and the tabua would be presented to him as a Chief Guest.[26]

41. In the absence of either party providing any substantial material in relation to tabua and their customary, social and economic context, the Tribunal has sought to inform itself through publicly accessible academic literature as to what if any, role the tabua play within the domestic economy of Fiji.[2] An example of this can be found in the works of Paul Van Der Grijp[27] in his article, Tabua Business; Recirculation of Whale Teeth and Bone Valuables in the Central Pacific[28] where he wrote:
    

Whale teeth, in the form of tabua, are still to be found in Fijian pawnshops. The highest concentrations of pawnshops are in the capital, Suva, and in Nausori, a town close to Fiji's second international airport. In April 2006, I found tabua for sale in three of the eight pawnshops in Suva and in all six Nausori pawnshops. The tabua were always hidden in a drawer of the manager's desk or locked in a safe place and never shown to the general public. I suspect that in at least some of the Suva pawnshops where the vendors claimed not to have tabua, they simply did not want me to know what they had. In Nausori, I encountered no such reticence and I was able to inspect all the tabua offered for sale by simply asking. In these nine pawnshops I was offered 23 tabua for an average price of FJ$200. Seven were very small and varied in price from 60 to 130 Fijian dollars. The 16 largest tabua were priced from 150 to 390 dollars. These are considerable sums for Fijians, although in terms of their monetary economy they remain within marginal limits. For example, even the most expensive tabua at FJ$390 cost less than a return air ticket to Australia or New Zealand. The price paid for tabua is also "symbolic" compared to what is paid for other valuables such as the larger pigs, tapa and fine mats. For indigenous Fijians, however, tabua are still expensive and represent personal and family treasures. Vuata (pers. comm., Suva 2006) explained, When you want to marry a girl, you need to give two or three tabua to her father, and they cost 500 dollars a piece. So you lose 1,500 dollars. There are plenty of them in the pawnshops. I have myself three tabua of a good size at home, because my two sons are going to marry soon. I need some more of them and will ask my friend for it. Fijians may sell tabua to other Fijians when they need money. Thus, the traffic in these items is not restricted to pawnshops. However, when people do not want others to know that they are selling their tabua, they take them to a pawnshop. Burglars steal tabua because these usually are the most valuable objects they can find in Fijian houses. These too may end up in pawnshops. After the Fiji coup in 2000, Vuata was walking close to a large pawnshop when a gang of Fijian youths ("street-boys") crashed a truck into the entrance of the pawnshop. They were only seeking tabua and came out with three or four cartons full. This may also explain the limited number of tabua offered for sale in each pawnshop, mostly two or three, with a maximum of five during my survey. Apparently, no pawnshop owner wanted to risk admitting that he actually had dozens or even hundreds of tabua in his shop, which would make it a real fale koloa, which is the Tongan word for shop and may be translated literally as 'treasure house'. All pawnshops, without exception, are both owned and staffed by Indo-Fijians. In cultural terms, the tabua business or gift exchange is an exclusively indigenous Fijian concern; the pawnshop mode of tabua trade, however, is an Indo-Fijian dominated business with openings for other buyers, such as Tongan artists and those who supply them with raw material for their trade. In pawnshops elsewhere in the world, jewellery, particularly gold jewellery, is the major trade item. In Fijian pawnshops, however, I have not seen any gold or other jewellery, only household equipment, light machinery, and shoes. Indigenous Fijians do not usually wear gold or silver jewellery, Indo-Fijians on the other hand are very fond of it. Once again, the numerous jewellery shops dealing in gold and silver appear to all be owned and staffed by Indo-Fijians. But these shops do not function as pawnshops.

42. Putting the possibly unintended discriminatory language to one side, the author nonetheless describes a healthy trade for tabua in Fiji. Against that backdrop and based on the evidence that has been submitted in these proceedings, the Tribunal is not satisfied with the explanation as to why the Taxpayer had such a large quantity of these whale teeth in his possession. There was no corroborative evidence provided by the Applicant's witness in this regard. He was not able to say that he saw any passing over of these items. Nor was there any evidence before the Tribunal that the Taxpayer could identify any tabua individually, nor associate a specific tooth with a particular gifting occasion. Again the production of business records would have perhaps provided some insight as to the state of affairs, if only just to show that no tabua had been traded through the business during a particular period of time. Yet even at trial, no documents were forthcoming. The Tribunal is not satisfied with the explanation provided. And while recognising that this concept of 'satisfactory explanation' is not the statutory test to be relied upon under the Tax Administration Decree, it is still a relevant consideration that shapes any analysis of unexplained wealth, particularly in the case where it may form the basis for the making of a tax assessment by the Respondent and where as a consequence, the question as to whether or not such an assessment is excessive or not, needs to be determined.
    
43. To conclude, the Applicant has not discharged the obligation at Section 21(1)(a) of the Tax Administration Decree 2009 to show that the assessment was excessive. It did not provide any records of the business, nor could it provide comprehensive proof of earnings for the cash sum in the relevant period. The gifting of 70 tabua appears to be an issue that is hard to reconcile. While Ratu D had indicated that some of the tabua adorned the bedroom walls of the Taxpayer's residence, the estimated 80 to 100 tabua that he claims to have seen in the cupboard of the Taxpayer's bedroom, are likely to have been located there as a secondary storage. Again no second hand dealer records were provided, even if just to indicate that there had been no transactions for a particular period of time, or that no tabua had been recorded as having been acquired. The Tribunal is of the view that the Taxpayer has not discharged the burden demonstrating that the assessment was excessive having regard to all of the relevant circumstances. [29]
    

The Issue of Penalty

44. Finally, it seems non-controversial that the Taxpayer has previously been issued with a tax penalty for failure to declare certain income received. In cross examination, the Taxpayer intimated that he was not aware of that fact. The Tribunal finds it hard to comprehend why the Taxpayer would not be aware of that matter. The hording of this large sum of cash and tabua, appears to have been associated with a business activity of the Taxpayer. The legislation makes clear that a second penalty should be set at 30%.[30] It is also noted that harsher penalties do exist at other locations within the Decree. On that basis, the penalty imposed by the Respondent would appear reasonable and consistent with the law in the circumstances.
    

Decision

The Tribunal orders that:-

(i) The Application of the Taxpayer is dismissed.

(ii) The Respondent is at liberty to make application for costs within 28 days.

Mr Andrew J See
Resident Magistrate

^[1] 14 January 2015.
^[2] It was the submission of Ms Lemaki, that parallel investigations were being undertaken by the Respondent in relation to the income tax implications of the assets.
^[3] The term ‘pawnshop’ is often used to describe a person who deals in buying and selling of second hand goods.
^[4] These documents have been admitted into evidence, though no formal Exhibit number was issued to them during proceedings.
^[5] Including a parliamentary sitting allowance and travel allowance that he says was non taxable.
^[6] Having said that, it is nonetheless noted that there is an entry dated 31 May 2006 showing a deposit into that ANZ Account for Office Space Rent in the amount of $4,390.81
^[7] While there seems some evidence suggesting that Mr R had also received tabua during his time as a politician, in cross examination he seemed to imply that the stolen tabua were those relating to the inheritance from his father and grandfather.
^[8] It is probably worth making a note at this juncture, that the total amount of verified payments within Folios 2 to 7, equate to approximately $90,428.85. It is also worth noting that the amount of withdrawals post receiving the parliamentary pension is only $66,199.74.
^[9] The isolation of those amounts is more an issue for any inquiry in relation to income taxation, not VAT in any event.
^[10] The assumption here being, that they must have been security for monies, unless of course the term was being used to embrace the pawnshop activities as well.
^[11] The Tribunal finds that explanation somewhat hard to accept.
^[12] This figure is often cited as the approximate reference to the actual amount of $127,180.00
^[13] And presumably the second hand goods dealing business.
^[14] Note that the jewellery was ultimately released from the scope of the re-assessment.
^[15] Presumably around this time, the Hilux vehicle was also determined to be outside of the scope of inquiry.
^[16] Based on the Tribunal’s calculations, that sum was closer to $90,000.00

^[17] [2006] FJCA 66
^[18] This accords with the initial evidence given by the Taxpayer when describing his business interests.
^[19] See Section 24(a) of the Decree.
^[20] It is noted within the evidence of Mr Gabirieli that no specific request for the register books was made. That being said, it would have been an easy thing to produce, if only just to shift the further burden on the Respondent to clarify on what basis it was forming its view. It is nonetheless submitted by the Respondent that requests for supporting documentary material were made and none were forthcoming.

^[21] See for example, Proceeds of Crime (Amendment) Decree 2012.
^[22] Having said that, it is somewhat intriguing that a former public official would not appreciate the benefits to be gained by actively communicating with the Respondent in this regard.
^[23] The course of previous dealings with the Taxpayer is in my view a relevant consideration.
^[24] See Division 1 of Part VIB of the Act that deals with unexplained wealth.
^[25] The registers required to be kept under both the Moneylenders and Second Hand Goods Dealers Acts, could have been produced to show whether or not there had been any trading activity.
^[26] As an observation only, one would have thought it would have been quite easy to have secured corroborative evidence in relation to the direct gifting to Mr R.
^[2]6. Note that this material has been used to gain a further understanding of the way in which tabua has been traded within the local economy only. Reliance on the information as background material, does not appear to offend Sections 84(2) or 100 of the Tax Administration Decree.
^[27] Professor of Anthropology, University of Science and Technology in Lille, France, and Member, Research and Documentation Centre, Oceania (CREDO), Maison Asie-Pacific, Marseilles
^[28] Journal of the Polynesian Society. Volume 116, No 3 2007 Auckland. pp 348-349.
^[29] Those relevant circumstances, would include the previous conduct of the Taxpayer, his reasons for why the items were in his possession; his failure to provide documentation to the Respondent; his lack of corroborative evidence and failure to notify the Commissioner that he was not presently involved in the taxable activities of money lending and second hand goods dealing.

^[30] See Section 46(3) of the Tax Administration Decree 2009.