Abdool Hassen Jeewooth
The Government of Mauritius
Appeal from the Court of Appeal of Mauritius
Composition of the Board:
Lord Goff of Chiveley
Lord Nicholls of Birkenhead
Lord Hope of Craighead
Lord Cooke of Thorndon
Judgment delivered on the 26th November 1996
by Lord Hoffmann
Cur. adv. vult.
The following judgment was delivered by the Board:
This is an appeal from an order of the court of Appeal (Lallah S.P.J. and Pillay J.) dated 5th May 1994 dismissing an appeal from an order of Forget J. dated 15th January 1993, by which the learned judge struck out the appellant's pleaded defence to a claim for income tax land a counterclaim for repayment of money recovered by the commissioner) on the ground that they disclosed no reasonable grounds of defence or cause of action.
The Government's action to recover the tax was commenced on 16th November 1988. It was based upon two assessments raised by the Commissioner on 28th May 1986 in a total sum of Rs. 6,026,875 in respect of the tax years 1985-86 and 1986-87. The defence admitted that the assessments had been made and served upon him but pleaded in effect that the amounts were excessive. It appears that the appellant had made no returns for the years in question and the assessments had been made upon the commissioner's estimate of his chargeable income.
The judge and the court of Appeal held that section 82 of the Income Tax Act prevented the appellant tram challenging the validity or amount of the assessments. The relevant parts of the section read as follows:-
"Except in proceedings on objection to an assessment under Part IX -
(a) no assessment ... shall be disputed in any court or in any proceedings either on the ground that the person assessed ... is net a taxpayer or on any other ground; and
(b) every assessment ... shall be final and conclusive, and the liability of the persons so assessed ... shall be determined accordingly. "
Part IX of the Act (sections 90-96) is headed "Objections and Appeals". A person who has been assessed to tax may, within 28 days of service upon him of the assessment, make an objection to the commissioner: section 90(1). It is a precondition of a valid objection that the taxpayer should have made a return for the relevant tax year and paid the tax shown by that return to be due: section 90(2). A proper objection must be considered by the commissioner, who may determine to disallow the objection or allow it in whole or in part: section 91. If the taxpayer is dissatisfied with the commissioner's determination, he may appeal under section 93 to the Tax Appeal Tribunal.
In this case, the appellant failed to abject within the 28 days prescribed by section 90(1). on 28th May 1986, when the assessment was served, he was in police custody and did net abject until 22nd August 1986. Section 90(3) gives the Commissioner power to entertain an objection made out of time when it is shown to his satisfaction that "owing to illness or other reasonable cause, a person has been prevented from making an objection within the time specified". The appellant relied upon his confinement as the reason why he had been prevented from making an objection. But the commissioner took the view that he had had access to legal advice and could have made his objection in time. He therefore refused to consider it.
The Income Tax Act used to provide for an appeal to the Tax Appeal Tribunal against the commissioner's refusal to exercise his discretion under section 90(3). But this right was abolished by the Finance Act 1985. The appellant lodged an appeal but in view of the change in the law the Tax Appeal Tribunal declined jurisdiction. This decision was affirmed by the court of Appeal in 1988 and is net challenged before their Lordships.
It follows that the proceedings under Part IX of the Act, insofar as they may be said to have taken place at ail, have run their course. But the effect of section 82 is to make such proceedings subject only to the possibility of judicial review on limited grounds (which their Lordships are not called upon to consider in this case) the only means by which the validity of an assessment or the amount of tax assessed may be challenged by the taxpayer. Their Lordships consider that the language of section 82 is plain and unambiguous. The assessments have become final and conclusive and cannot be disputed on the ground that the tax was not due or on any other ground.
Mr. Glover, who appeared for the appellant and t~ whom their Lordships are indebted for his attractive and economical argument, said that the commissioner had acted oppressively and unfairly in refusing to entertain his client's objection in 1986. He ought therefore to be allowed now to deploy the arguments which he might otherwise have raised by way of objection and, if necessary, by an appeal to the Tax Appeal Tribunal. But section 90(3) conferred an administrative power upon the commissioner. Although the right of appeal to the Tribunal against his decision net to exercise that power had been abolished, the exercise of his discretion would on ordinary principles have been subject to central by judicial review. But any challenge on grounds of, for example, procedural irregularity or irrationality should have been made at the time, by public law proceedings. If they had been successful land their Lordships have no material on which to express any view as to whether they would have been or net), the proceedings under Part IX could have taken their normal course. Mr. Glover frankly acknowledged that, by the time he was called upon to advise in the present action, he took the view that there was no prospect of obtaining leave to review the 1986 decision. But it seems to their Lordships that the consequences of this omission, even on the assumption that the commissioner's decision could have been set aside, are now beyond remedy. Section 82 does net permit a court hearing an ordinary civil action for recovery of tax as a debt to enter into a challenge to the exercise of the Commissioner's discretion under section 90(3), still less to undertake an inquiry into the amount of tax properly due, which under Part IX is within the exclusive jurisdiction of the commissioner and the Tax Appeal Tribunal.
Mr. Glover also raised some procedural points about the motion to strike out the defence. He criticised the judge for having referred to an affidavit sworn on behalf of the Government deposing to the fact that the appellant's appeal to the Tax Appeal Tribunal had been dismissed for want of jurisdiction. He said that on a motion to strike out a defence under Rule 20 of the Rules of the Supreme Court 1903, the court should confine itself to the pleadings and not look at affidavits. But their Lordships think that there are two answers to this point. First, the proceedings before the Tribunal were relevant only as background. The Government's case rested upon the making and service of the assessments, which were admitted. It was for the defence to plead some ground in law which made them unenforceable. Secondly, the court was entitled to rely upon its inherent jurisdiction to strike out a defence as frivolous and vexatious and it is well established that for this purpose affidavit evidence is admissible.
The proceedings before Forget J. took a slightly unusual course. He had before him both the Government's motion to strike out the original defence and a motion by the appellant to amend his pleadings by substituting a new defence and counterclaim. He dealt with the matter in two hearings. At the first he allowed the amendment and at the second he struck out the amended statement of claim. It would have been open to him to deal with both motions together; to strike out the original defence and to refuse leave to amend on the ground that even as amended, the pleading would net disclose a reasonable defence. Before the court of Appeal it was argued that as Forget J. had allowed the amendment, he must be taken to have held that it disclosed an arguable defence. He should net therefore have afterwards struck it out. Mr. Glover did not pursue this point before the Board and their Lordships think that this was a sensible decision. It is clear tram the judgment of Forget J. when giving leave to amend that he was in no way passing upon the merits of the defence. It was a matter of convenience to grant the amendment so that the subsequent hearing of the Government's motion could concentrate upon the appellant's final pleading rather than one which he wanted to abandon. No one could have been in any doubt about the matter and the appellant suffered no prejudice.
Finally, Mr. Glover made some comments of a general nature upon the procedures of the Tax Appeal Tribunal. He questioned the constitutionality of the provision by which it is required to sit in camera and the validity of the way in which it was composed for his client's hearing. But he accepted that these questions could have had no impact upon whether his client now had a defence to the Government's claim. Accordingly, their Lordships will say nothing about them. The appeal must be dismissed with costs.