Judgment Title: Menolly Homes Ltd -v- The Appeal Commissioners & Anor
Composition of Court:
Judgment by: Charleton J.
Status of Judgment: Approved
Neutral Citation  IEHC 49
THE HIGH COURT
2009 723 JRBETWEEN
MENOLLY HOMES LIMITED
THE APPEAL COMMISSIONERS AND
THE REVENUE COMMISSIONERS
RESPONDENTSJUDGMENT of Mr. Justice Charleton delivered the 26th February, 2010
1. The applicants claim the right to cross-examine a tax inspector on a V.A.T appeal before the Appeal Commissioners. In May, 2004 the Revenue Commissioners, through the tax inspector, assessed the applicant Menolly Homes Limited to just under €20M in unpaid V.A.T. on the sale of new houses. Such sales are normally subject to V.A.T., but these apparently took place in the context of a scheme of leasing as between closely related companies. The Revenue Commissioners did not accept the transactions carried a V.A.T. exemption. Menolly Homes claimed they did not owe this amount of V.A.T., or anything like it. They say that the assessment should never have been raised. They appealed to the Appeal Commissioners claiming their leasing arrangements entitled them to a V.A.T exemption. A hearing, lasting so far about 16 days, took place over two years between 21st May, 2007 and 29th May, 2009. This judicial review is essentially about proceedings on that last day. Fundamentally, the applicant claimed that the tax inspector who assessed that the tax was due had no “reason to believe” that an amount of tax was due and payable by them; the statutory formula which allows him to raise an assessment. As taxpayers, they proposed to call that tax inspector in evidence on the appeal before the Appeal Commissioners and to cross-examine him as to his state of mind five years previously when he had raised the assessment. This was with a view to demonstrating one of: a lack of good faith; that his view was not factually sustainable or; that his view was unreasonable. They did not specify which. The Revenue Commissioners protested the calling of the tax inspector for the purpose of cross-examination by the applicant and would not tender him in evidence. They said there was no jurisdiction and, in any event, no issue requiring him to be heard arose. The Appeal Commissioners ruled in the favour of the Revenue Commissioners.
2. The matter now comes here for judgment whereby it is sought to upset that decision and require the respondents to proceed on the basis of allowing the applicant to cross-examine the tax inspector. Two factors, principally, excite the applicants into the thought that there might be profit to this cross-examination: firstly, that the concept of abusive process, whereby the true but underlying nature of transactions are discovered by analysing and redefining an apparently lawful and V.A.T. exempt guise, was not crystallised in European or Irish Law at the time of the V.A.T. assessment; and, secondly, that inquiries made by the Revenue Commissioners into these transactions after the assessment was made might be demonstrated to show them floundering around in post-justification enthusiasm.
3. The applicants contend that an Appeal Commissioner would have authority to call an inspector of taxes or to require the Revenue Commissioners to make him available for cross-examination. The applicant contends that the Appeal Commissioners therefore had jurisdiction to rule that the assessment was not properly raised and thus to strike it down. To do otherwise, it is argued, would leave a want of fair procedures whereby a witness who could be cross-examined, and thus give valuable evidence, would not be heard. This desire to hear from this witness, and to subject him to the challenge of cross-examination was, the applicant say, “well flagged”; the crystallisation of this issue resulting in the ruling against the applicants of the 29th May 2009. Having a “reason to believe” or, more importantly from the point of view of the applicants, not having a “reason to believe”, is only ascertainable, the applicant’s contend, from the evidence of the tax inspector. Nothing on the face of the documents, they assert, shows the grounds for such a reason and, indeed, the document of assessment from the Revenue Commissioners consists of a characteristically terse statement that V.A.T. is due, followed by a schedule of figures. The wording of the legislation, in referring to the power of the Appeal Commissioners “to reduce or abate” the liability of a taxpayer indicates, it is argued, wide-ranging powers including, in effect, the power to strike down a tax assessment. As to when any taxation issue about the sale and leasing of these new homes as to bank consent, the validity of an arrangement for lease of land and sale, or the legal effect of documents apparently exchanged between related companies, might have arisen, the inspector’s mind might not, the applicant argues, be able to say much factually about that, but a great deal could be gleaned through cross-examination as to what he knew, or had “reason to believe”, when this allegedly unlawful tax assessment was first raised.
4. In that regard, the majority of the argument before the Appeal Commissioners has hinged on a rule of interpretation in European Law that some might argue has been around since 1974; van Binsbergen v. Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid, (Case 33/74)  E.C.R. 1229. However, this rule established itself only, it is contended by the applicants, well after the tax assessment with what might be urged to be, from the point of view of the Revenue Commissioners either a reiteration of that principle, or its statement in digestible form, in Halifax plc, Leads Permanent Development Services Limited, County Wide Property Investments Limited v. Commissioners of Customs and Excise (Case C-255/02)  ECR I-1609. All of this concerns the redefining of purported legal transactions to achieve a V.A.T. exemption in order to discover their real effect.
5. Fortunately, it is not necessary for me to decide those issues or as to whether there might be any similarity in the situation under review before the Appeal Commissioners and the judgment of this court Cussens v. Brosnan,  IEHC 169; now under appeal to the Supreme Court. Rather, this case concerns the jurisdiction on appeal in a V.A.T. assessment before the Appeal Commissioners; whether any jurisdiction to order cross-examination has been decided at that appeal within jurisdiction; and whether a delay of approximately five years between the raising of the assessment and the ruling on the issue of cross-examination informs the courts interpretation of the relevant legislation, or operates as a discretionary bar to any form of judicial review relief that might otherwise arise.
6. The applicants are builders. In respect of a substantial number of the dwellings that they have constructed, they claim to have entered into transactions which much reduce the rate of VAT that they are liable to pay in respect of their business. It is clear that the Revenue Commissioners have a serious issue with the purported transactions whereby taxation is claimed by the applicants not to be due. It is clear, from the correspondence, that these issues were first raised by the Revenue Commissioners in the early part of 2003. In response to what appears to be an ongoing series of communications, the tax adviser of the applicants wrote to the Revenue Commissioners on 19th September, 2003, in the following form:
At the site which you have queried, Menolly Homes Ltd. engaged Hansfield Homes Ltd. to construct foundations on the plots for the houses its land and entered into a short lease of the plots on which the foundations have been constructed with Hansfield Ltd. which terminates immediately before the conveyance of the plots to the ultimate purchaser.
As Menolly Homes Ltd. has not waived its exemption, its letting of the plots to Hansfield Ltd. is a VAT exempt letting. It had, therefore, no entitlement to input deduction in respect of the developments (construction of the foundations) on the land.
Section 46(a) of the VAT Act 1971, states that, ‘notwithstanding anything in this section or s. 2 VAT shall not be charged on the supply of immovable goods –
You may, if you claim that the amount due is excessive, on giving notice to me within a period of 21 days from the date of this notice, appeal to the Appeal Commissioners.
If you appeal this assessment, you must pay the amount which you believe to be due. If the amount pays more than 80% of the tax which is found to be due on the determination of the appeal, and the balance, if any, is paid within one month of the date of the determination, interest in accordance with s. 21 will not be chargeable from the date of the rating of the assessment. Subject to the right of appeal, the Revenue Commissioners will proceed to recover the balance of tax set out in column 4 of the Schedule.”
· The applicant was at all times the owner of the lands in question and purported to employ Hansfield (or sometimes Enterprises) to carry out some initial works (site clearance, foundation works for houses or apartments). VAT would be chargeable to the applicant on the consideration payable by it for these works in the normal way.
· The applicant then, after the initial works had been carried out, purported to execute a two-year lease of the lands with (only) building foundations thereon, with Hansfield as tenant, such lease being allegedly an exempt supply for VAT purposes (there was some cases where construction had commenced prior to the VAT avoidance scheme being contemplated at all, and further circular and artificial arrangements were put in place by the applicant in an attempt to deal with that complication).
· The applicant has alleged that the initial foundation works above were carried out for the purposes of letting the site (with foundations), as opposed to being carried out for the purposes of building and selling houses thereon. That is argued, notwithstanding the context where there was no break in the continuity of construction work on the sites and, notwithstanding that, the dwellings are built on the foundations, principally by the applicant itself (or enterprises) as the main contractors on site.
· A taxpayer engaged in a supply of VAT exempt (as opposed taxable) goods or services is not entitled to a credit for VAT suffered by it on its business purchases/inputs. The applicant argues that, as the initial works in this case were allegedly carried out for the purposes of the exempt letting described (rather than for the construction and taxable sale of a house), the applicant thereby had no entitlement to input credit in respect of the VAT paid by it on the charge for those initial works.
· In those circumstances, the applicant alleges that s. 4(6) of the VAT Act applies and supersedes any other relevant provisions and applies such that the applicant can avoid the normal VAT charge on the sales of developed sites to consumers - such sales being structured as a sale of a site (from the applicant), coupled with a building agreement (from Hansfield).”
10. To these contentions the applicant has put forward detailed arguments which are eloquently demonstrated in the affidavit of Brendan O’Byrne dated 22nd December, 2009 and filed in these proceedings. Judicial review is about procedure, in general, and I am making no choice as between the contending facts of this scheme.
11. On 29th May 2009, Commissioner O’Callaghan, having been explicitly asked to call the tax inspector that day, or to direct the Revenue Commissioner to make him available to the applicants, for cross-examination, refused. He gave the following ruling:-
In this instance I have no indication of any such capriciousness. I have an assessment which stills stands, which seems to be in numerical agreement with the submission made and, of course you say that it is bad for the various reasons you have advanced but there is nothing there that indicates that the original assessment made was anything other than made by somebody who had reason to believe that these were the amounts due.
The key point, as I started out by saying, is the fact that I don’t believe an assessment has to made, following a perfected judgment. I think the process requires the assessment as soon as the inspector has reason to believe that there is tax due and he may have to subsequently refine his judgment when the facts come to light.
Implicit in your submission is the argument that the fact that it must all be in his possession. I don’t agree with that as a matter of law. In that context I don’t see that there is anything to be gained by cross-examining him or rather examining him, because I don’t see that we can anywhere. I understand your submission clearly and I don’t think there is anything there and accordingly I’m not going to and in fact I may not have power to do so, as [counsel on behalf of the revenue commissioners says, so I do not agree with [counsel for the taxpayer’s] submissions on this point.”
12. Revenue law has no equity. Taxation does not arise by virtue of civic responsibility but through legislation. Tax is not payable unless the circumstances of liability are defined, and the rate measured, by statute. To import into taxation legislation any notion of general obligation is to return from the modern concept of precise obligation pursuant to defined legal rules into an era when feudal ties governed the relationship of those who served a monarch or lord and were in turn entitled to protection. How tax becomes payable, what exceptions avoid general liability as and when these genuinely arise, when payment is due, what records have to be maintained by taxpayers, which levels of taxation are applicable to what transactions or events and how the power of the tax collector is both defined and circumscribed are all precisely defined by modern legislation. In a similar way, what remedy that taxpayer has against a taxation demand is not general but specific. It is cut from the cloth whereby the precise liability is set by statute law and tailored individually by the legislature in the way that suits their perception of how an income tax, a corporation tax, a capital gains or acquisitions tax or a value added tax appeal should be set up as to the scope of appeal, the procedure on that appeal and the remedies available to the appellate body. In all relevant legislation in Ireland, appeal against a claim of taxation liability is to the Appeal Commissioners. But, as might be expected, that appeal is not always to be engaged in the same way. I turn now to the legislation. My focus is on whether the argument on behalf of the Revenue Commissioners that the Appeal Commissioners had no jurisdiction to call the inspector of taxes who raised the original estimate is valid. In doing so, I caution myself against the use of case law derived from United Kingdom provisions. That legislation uses different wording and thus seeks to import a different concept. In addition, decisions made by courts in that jurisdiction have introduced procedural rules on hearings on appeal from assessments which should not be thoughtlessly imported as an adjunct to our legislation. In the use of particular words, the Oireachtas is seeking to define tax liability in particular circumstances and, in the context of the proper conduct of an appeal, a precise form of jurisdiction.
13. Legislation must be seen in the context of the entirety of applicable provisions. It should not be deconstructed so that a phrase or subsection is taken out of the overall context of the legislative scheme whereby a particular purpose was being pursued. Words are to be given their ordinary or, where appropriate, technical meaning. The use of one particular form of words does not allow for its substitution by any other set of words which alters the concept that the legislation is conveying within the context of the legislative intent as deduced from the statute. While not being entitled to alter or ignore statutory words in order to prevent a provision from being unworkable, how an interpretation contended for might work out in practice may be part of the test from which the meaning of legislation is to be derived.
14. In this respect, I will not touch on any of the issues as between the parties before the Appeal Commissioners. They are not a matter for me.
15. Section 23 of the Value Added Tax Act, 1972, as amended, shown in square brackets, provides the relevant power to the Revenue Commissioners to raise an assessment:-
(b) The total amount of tax refunded to the person in accordance with s. 20(1) was greater than the amount (if any) properly refundable to him or
(c) An amount of tax is payable by the person and a refund under s. 21 has to been made to that person,
(ii) The total amount of tax (if any) paid by the person or refunded to the person in relation to the said period, and
(iii) The total amount so due and payable as aforesaid (referred to subsequently in the section as “the amount due”).
(2) Where notice is served on a person under subsection the following provisions shall apply:-
(a) The person may, if he claims the amount due is excessive, on giving notice to the Revenue Commissioners within the period of twenty one days from the date of the service of the notice, appeal to the Appeal Commissioners…”
16. As I have stated, the core argument on the appeal has concerned purchase and leasing transactions as between two related entities. An exemption from V.A.T., in that respect, may or may not arise under s. 4(4) or the Value Added Tax Act, 1972. This provides as follows:-
18. These appeals may be taken by any “person aggrieved by a determination” in that regard. An appeal in respect of an assessment for V.A.T. is also provided for; but only on the grounds that “the amount due is excessive”. It is noteworthy that, in contrast, decisions in respect of taxable status by a “person aggrieved” are specifically appealable.
19. Under s. 25(2) the provisions set out as to appeals in the Taxes Consolidation Act 1997, are applied as to “the hearing and determination of an appeal by the Appeal Commissioners…” By s. 25(2) of Value Added Tax Act, 1972, the provisions of the Income Tax Acts, which has now become the Taxes Consolidation Act, 1997, are applied to appeals in V.A.T. matters. That, however, is “subject to the modifications set out” within that section and “to other necessary modifications”. This means that an appeal in respect of V.A.T. is not to be construed as being founded necessarily on the same jurisdiction as in income tax or corporation tax. But, otherwise the hearing is to as if the appeal were an appeal against an assessment of income or corporation tax. It is also noteworthy that whereas s. 933 of the Taxes Consolidation Act 1997 allows a person “aggrieved by any assessment to income or corporation tax made on that person by the inspector” to appeal to the Appeals Commissioners, the power of appeal provided for in s. 23(2) of the Value Added Tax Act 1972 is in respect of a person who “claims that the amount due is excessive”. In hearing that appeal, the Appeal Commissioners are exercising the jurisdiction conferred by s. 934 of the Taxes Consolidation Act 1997. Bearing in mind that the appeal is subject to the exact wording of the Value Added Tax Act, 1972, I now set out section 934, dealing with procedure on appeals, in full:-
(b) to produce any lawful evidence in support of the assessment, and
(c) to give reasons in support of the assessment.
(ii) any person who has been admitted a member of the body incorporated under the Companies Act, 1963 , on the 31st day of December, 1975, as The Institute of Taxation in Ireland".
(5) Unless the circumstances of the case otherwise require, where on an appeal against an assessment which assesses an amount which is chargeable to income tax or corporation tax it appears to the Appeal Commissioners
(a) that the appellant is overcharged by the assessment, they may in determining the appeal reduce only the amount which is chargeable to income tax or corporation tax,
(b) that the appellant is correctly charged by the assessment, they may in determining the appeal order that the amount which is chargeable to income tax or corporation tax shall stand, and
(c) that the appellant ought to be charged in an amount exceeding the amount contained in the assessment, they may charge the excess by increasing only the amount which is chargeable to income tax or corporation tax.
21. I turn now to the general jurisdiction, as opposed to that specific to V.A.T., exercised when a taxpayer appeals. The function of the Appeal Commissioners on the appeal is conveniently stated by Lord Heward L.C.J. in Sneath’s case 17 T.C. 149 at 493:-
24. By way of further contrast between the Taxes Consolidation Act 1997 powers of appeal in relation to income and corporation tax to appeal if aggrieved as a taxpayer, as compared to those set out in ss. 23 and 25 of the Value Added Tax Act 1972 to appeal amount, where an assessment to liability is made, I turn to the legislation of the neighbouring kingdom. I note that under the Value Added Tax Act 1994 of the United Kingdom, that s. 83 allows for an appeal to a tribunal in respect of either “an assessment… or the amount of such an assessment”.
25. In Van Boeckel v. The Customs and Excise Commissioners,  S.T.C. 290, Woolf J. was of the view that tax commissioners, who are equivalent to our tax inspectors, should make “all reasonable investigations before making an assessment”. Under the English legislation, those assessing the tax are to act “to the best of their judgment”. This applies, as the legislation requires, both to assessing the amount of tax due under V.A.T. liability and raising an assessment in the first place.
26. There is no doubt on the decided cases, within the context of that entirely different United Kingdom legislation, that both the amount of value added tax assessed and the validity of the assessment made in the first instance, may be appealed to the appropriate United Kingdom body, which, in that jurisdiction, is a tribunal. The operative wording as to the jurisdiction of that tribunal on appeal is derived from s. 73(1) of the Value Added Tax Act, 1994. The entitlement of the tax commissioners to raise an assessment arises where there is an absence of documents kept by the taxpayer, or the taxpayer failing to afford the facilities necessary to verify relevant returns, or where it appears that the returns made by the taxpayer are incomplete or incorrect. Then, the amount of V.A.T. due from the taxpayer is to be assessed by the commissioners “to the best of their judgment”. The wording in the Irish Act is entirely different. It speaks of the tax inspector having “reason to believe” that an amount of tax is due and payable and, then, of making an assessment. Such different wording should never be conflated. The tribunal on appeal in the neighbouring kingdom, in exercising the relevant powers of assessment as to the amount, and in ruling on the issue as to whether the tax commissioners were wrong to raise the assessment in the first instance, are entitled to hear the commissioners. Woolf J. has developed a limited jurisdiction whereby the commissioner raising an assessment might be called. This question as to the validity of a judgment by a tax commissioner to raise an assessment in the first place, however, was generally to be heard as a preliminary issue. At para. 38 of the judgment Woolf J. stated:-
(ii) Where the taxpayer seeks to challenge the assessment as a whole on “best of their judgment “ grounds, it is essential that the grounds are clearly and fully stated before the hearing begins.
(iii) In particular the tribunal should insist at the outset that any allegation of dishonesty or other wrongdoing against those acting for the commissioners should be stated unequivocally; that the allegation and the basis for it should be fully particularised; and that it is responded to in writing by the commissioners. That tribunal should not in any circumstances allow cross-examination of the Customs officers concerned, until that is done.
(iv) There may be a few cases where a “best of their judgment” challenge can be dealt with shortly as a preliminary issue. However, unless it is clear that time will be saved thereby, the better course is likely to allow the hearing to proceed on the issue of amount, and leave submissions on failure of best of their judgment, and its consequences to be dealt with at the end of the hearing.”
27. I would not be prepared to import these procedural rules as they arise entirely within the context of the United Kingdom legislation. Dealing with this issue in explicit terms and particularising why the tax commissioners ought to be called emphasises the time element in taxation appeals. I will return to that point. Respecting, as I do, the judgment of Woolf J., this markedly contrasting British legislation strengthens the view that I have formed that there is no jurisdiction in the Appeal Commissioners in Ireland on a V.A.T. appeal to enter into an enquiry as to whether the inspector in raising the assessment failed to act on the basis of having “reason to believe” but was, instead, acting without good faith, or in circumstances that were capricious or amounting to a factually unsustainable view, or was acting unreasonably. I turn now, in an attempt to define or at least elucidate it, to the actual wording in question that allows a tax inspector to raise and assessment of liability to V.A.T.
28. Under s.23(1) of the Value Added Tax Act, 1972 the inspector of taxes may proceed to assess tax act where he or she “has reason to believe that an amount of tax is due”. In using the word “believe” as opposed to words such as “conclude” or “suspect”, a very wide form of jurisdiction is implied. In the course of his judgment in Hanlon v. Fleming,  I.R. 489, Henchy J. had to consider the wording of criminal statute from England and Wales in relation to receiving stolen goods, whereby the wrong was committed where the accused handled stolen goods “knowing or believing the same to be stolen goods”. He emphasised that knowledge was different to belief. At p.497 he offered the following observation:-
“While knowledge and belief frequently coincide or overlap (for example I both know and believe that this is the Supreme Court), there are many matters which one may believe to be correct without being able to say that one knows them to be correct. For example, I may believe that there is life in outer space, that evolution is the origin of species, that a particular person did a particular act, but I may have to admit that I do not known or do not know with any substantial degree of certain, that such beliefs are well-founded. Without entering into the intricate logical, meta-physical and philosophical problems involved in a comparison of knowledge with belief, and keeping the matter on the plain of ordinary usage (which is, presumably, how it would be dealt with by both judge and jury), I would point to the commonly used expression “I believe it to be so, but I do not really know”.
30. A further argument arises. It is said that inherent in the powers of the Appeal Commissioners are not just the ability to reduce a liability to V.A.T. but to remove it entirely. Thus, it is contended, the tax inspector, if he is shown to be wrong, will have raised an assessment wrongly and it should be struck down on appeal. This would, it is argued, amount to removing the liability and not just to removing it. Since the powers of the Appeals Commissioners on such an appeal in a V.A.T. matter are in part set out in s. 934(3) of the Taxes Consolidation Act, 1997, I now quote that:-
(2) that it be varied by increasing or diminishing it to a definite amount to be fixed by them, or
(3) that the appeal be dismissed, in which event the original assessment stands good.
32. The Concise Oxford English dictionary does not support the view that by using two words side by side in terms of ameliorating the effect of an assessment, that the Oireachtas thereby intended, within the specific context of the right of appeal as to amount only in relation to an assessment of V.A.T. liability, that the Appeal Commissioners should have power to strike down the assessment, as well as reducing the amount. Two meanings are given in relation to the word “abate” in that dictionary:-
“1. (Of something bad) become less intense or widespread.
2. Law reduce or remove (a nuisance).
33. On the other hand, “reduce” is defined as to “make or become smaller or less in amount, a degree or size”. A nuisance may be abated, in the sense that it may be removed, or reduced to the degree that it is no longer a nuisance in law. Then the nuisance ceases to exist. The cause of action is removed. A reduction, on the other hand is defined by my dictionary as to “make or become smaller” or, in other words, less in amount, degree or size.
34. With the absence of equity in taxation law, liability and the manner of proceeding in raising tax and procedures on appeal depending upon the precise wording of a statute, it is clear that the Appeal Commissioners must be given the power to entirely remove liability to pay under the assessment and not merely to reduce it. That is my view as to why two words are used. I note, however, the common legal habit of over pleading and pleading in multiple alternatives. Here is an example: in suing in relation to a check being refused in front of a man’s friends following a meal in a posh hotel, implying inability to meet debts, lawyers will often plead that liability to pay damages would arise in law due to breach of duty, breach of contract, negligence and that defamation of the plaintiff occurred as well. However, I must generally presume that a statute does not use surplus words, though sometimes I wonder.
35. An assessment of V.A.T. under s. 23 of the Value Added Tax Act, 1972 gives rise to a difficulty for the taxpayer. That difficulty, however, is imposed by the Oireachtas within a context of the tax inspector having “reason to believe that an amount of tax is due and payable” to the State. The Oireachtas has formulated wording whereby an appeal can be taken only in respect of amount. A taxpayer engages the burden of proving that tax is not due, on taking that appeal, but within a context of a hearing which is not hide-bound by regulation but rather looks to enquire into the truth of taxation liability. Within that context, where no tax is due, or where the amount should be reduced, the exercise undertaken by a taxpayer who complies with the rules in relation to record keeping could not be regarded as especially burdensome before a tribunal which has always shown itself to be both expert and open-minded.
36. Finally, I am influenced, but it is not decisive on this issue, that with the passage of four years, the original assessment cannot again be raised. In that regard an assessment of V.A.T. cannot be raised four years after the amount becomes due, absent, neglect or fraud; see s. 30 of the Value Added Tax Act, 1972. I quote this below. There is no question but that the advisors on behalf of the applicant acted in good faith in relation to this matter. They were not out to delay matters. A situation could easily arise, however, where this point was raised in passing, without an explicit demand for the inspector to be called that day or on a named day proximate to it, in the context of a lengthy hearing and, as happened here, four years had passed before any application in terms was made to call the inspector of taxes. If he was then called and slipped up in the manner of his evidence, or if he died in the meantime, or became too ill to give evidence or could not at all remember the details of the file, the taxpayer appealing might argue for a free exemption from taxation liability. There is nothing in the legislation which leads me to believe that the Oireachtas ever even contemplated the bizarre situation akin to those which sometimes arise in those circumstances following on the arrest of an individual for serious crime, much less ever intended it. To pursue such a policy would strike at the good order inherent in the rational scheme of taxation collection which I am satisfied exists in this context for the good of the State. I also think that were a tax inspector to be unavailable, for whatever reason, in any appeal where calling him was within the jurisdiction of the Appeal Commissioners, and was necessary, that the relevant state of mind could be inferred from circumstances. That is what happens in criminal law where the intent, or state of knowledge, or recklessness, or objective state of criminal negligence is inferred from the circumstances proven. The contrary, where because the arresting Garda is no longer available, a detention becomes unlawful, is untenable in any rational taxation system. I mention this because it might arise that a tax inspector is unavailable when the point is raised that no one else could take his or her place and the documentary evidence might be insufficient to supply the absence.
37. There is an appropriate remedy to a person who claims that he is being assessed to V.A.T. in circumstances where he says that the tax inspector had no “reason to believe that an amount of tax is due and payable”, within the meaning of s.23(1) of the Value Added Tax Act, 1972. That remedy is judicial review of administrative action. If there are circumstances upon which it may be argued that such an assessment was arrived at capriciously, unreasonably or in bad faith, then an applicant may seek a declaration that the notice of assessment is invalid; that the assessment be quashed; or that an injunction be issued to prevent its operation. In Viera v. The Revenue Commissioners,  IEHC 431 the applicant sought judicial review in respect of a notice of assessment to Value Added Tax in the sum of €3,085,025, raised by the Revenue Commissioners in December, 2006. The nature of the argument advanced was that the relevant sum could not be demonstrated by the Revenue Commissioners to be due and payable in the context of the case. Precise details as to taxation activity, it was said, as in this case, were still being sought by the Revenue Commissioners some months after the assessment. A contended for absence of calculations of the tax due and payable was said to undermine statements in the tax assessment that there was reason to believe that tax was due. The judgment of Ó Néill J. involved looking at the contentions, first of all, of the applicant, and then considering what material was set out in the affidavit so as adjudicate whether there was “reason to believe” that tax was due. I quote the following paragraphs from the judgment of Ó Néill J.:-
“I note that in this case that all the information furnished to Mr. O’Brien was from the applicant company itself. As noted above, the audit on the applicant company was brought about on foot of applying for a refund of corporation tax for the year ended the 31st August, 2004. Mr. O’Brien held a director’s report and financial statements for the year ended the 31st August, 2004 which also included figures from the preceding financial year. These documents were submitted by the company in respect of the application for a refund. Mr. O’Brien also held the VAT returns made by the company which included details of their gross sales figures. Mr. O’Brien’s file note of the meeting of the 23rd August, 2005, as exhibited in his affidavit sworn on the 22nd October, 2007, details the documents that were made available to him at the meeting as “the audit trail, nominal [bank] accounts, linking papers and the [financial] records”. At para. 12 of his affidavit sworn on the 22nd October, 2007, he avers that it was explained to him that VAT had not been charged on the sales of undeveloped sites, as opposed to houses. He found that this was in order and excluded those sales from his consideration. In the meeting of the 6th October, 2005, Mr. O’Brien was furnished with a sample licence agreement. His file note of the 6th October, 2005, states as follows:-
38. This remedy of judicial review would have been available to the applicant to explore the contention that is made that the tax inspector never had reason to believe that an amount of V.A.T. was due and payable by Menolly Homes Limited. I note that in taking such an application that it would be more logical in the context of s. 30 of the Value Added Tax Act, 1972 that it be taken within the time limits set down for judicial review in Article 84 of the Rules of the Superior Courts. This is six months for certiorari and three months for all other remedies. In the context of the need of State to collect tax due, it is difficult to see how these ample time limits could routinely be extended.
39. I turn now to the issue of cross-examination. Within what was obviously a careful reading of the relevant legislation, and in a context where the entire of the evidence was considered, the first respondent Appeal Commissioner ruled that there had been no capricious assessment that would run foul, or could run foul, of the contention that the Revenue Commissioners had no “reason to believe” that an amount of V.A.T. was due and payable. The Appeal Commissioner indicated that there was no indication of capriciousness. Instead he ruled that there was nothing to indicate that the assessment to liability to V.A.T. by the tax inspector was made by anyone other than someone who had reason to believe that the relevant amounts were due. This was, in my view, a ruling within jurisdiction.
40. My views as to the nature of cross-examination as an aid to an administrative process have been set out fully in J and E Davy trading as Davy v Financial Services Ombudsman Ireland and the Attorney General,  IEHC 256. There is no point in repeating herein what I have already decided in that case, especially as the matter is under appeal to the Supreme Court which has reserved decision on the matter in July 2009. A decision by a person exercising quasi-judicial authority not to allow cross-examination of a particular witness, or not to allow an oral hearing on a particular issue, in that context, is subject to judicial review. The review can only arise, however, where the decision made on a particular point not to allow cross-examination or the raising of an issue by oral evidence, is unreasonable. As to whether cross-examination should be allowed or not is within the jurisdiction of the administrative officer exercising a quasi -judicial function. The test, as I saw it, in the Davy case was whether that process of calling and examining a witness was necessary for a fair adjudication of the issues in question. At para. 38 of the judgment, I said:-
“There are a number of similarities between Jussila v. Finland and the present case. As in that case, the purpose of the request for an oral hearing was cross-examination, which in that case and in this the tribunal reasonably found to be unnecessary. The Court accepted that ‘demands of efficiency and economy’ may justify a lack of a public hearing; in the present case, the Court is concerned with a scheme ‘under which . . . disputes may be resolved quickly and with minimum formality’, a consideration that justifies holding a public oral hearing only when that is necessary fairly to determine the dispute in question.””
42. At para. 70 of the Davy decision I referred to a power within the administration of an adjudication by the Financial Services Ombudsman to review the papers and decide whether any form or oral hearing is necessary. That hearing, as I have indicated, is only required where there is an issue of fact which cannot fairly be resolved without hearing the parties. In this instance, the papers may well have been sufficient for the Appeal Commissioners to come to the view that such a hearing would be pointless. There was no contested issue of fact as between opposing witnesses, as evidenced from their written statements, unlike in the Davy case. There was an attempt to make an issue of fact through cross-examination. While that can be legitimate, it is within the scope of an administrative officer to rule on whether an issue requires cross-examination. It is within his jurisdiction to adjudicate that objectively the point could not arise.
Here, the point did not arise. The reasoning was that no hint was given of capriciousness or absence of belief based upon reason. That being a decision reasonably arrived at, the decision of the Appeal Commissioner not to allow cross-examination was made within jurisdiction. Again, I would caution against any tendency towards applying rules of civil plenary procedure within an administrative context in an unthinking or uncircumcised way. If any examination or cross-examination is required, the particular point involving a conflict of evidence, or whereby a genuine issue is raised as to the absence of evidence, or absence of a sufficiency of evidence, should be identified. Only such witnesses as are necessary to deal with that should be called for cross-examination. The process of examination and cross-examination should not be allowed to get out of bounds. It should be borne in mind that, for instance, taking a snippet of a sentence from a witness’s statement out of the context of a paragraph may be grossly unfair. As I said in Davy:-
“The process of examination and cross-examination should not be allowed to get out of control. In recent times, the Commercial Court has adopted a procedure of often taking the witness statement of a party as evidence in chief and of proceeding directly to cross-examination. It may be necessary in some few instances to allow the party presenting the witness for cross-examination to ask some additional questions by way of clarification. Those cross-examining can be expected to be concise, to be polite and to be professionally efficient. Cross-examination may be curtailed by reason of prolixity; it may be corrected where it oversteps the mark of a good advocate in terms of politeness and instead becomes rude; it may be restricted on matters of credit to those issues which bear a real relationship to the matter in issue; and it should be controlled so that it assists in the exercise of finding the truth.”
43. I have found against the applicant in relation to the substantive points in this appeal. By reason of the fact, however, that under s. 30 of the Value Added Tax Act, 1972 any assessment to Value Added Tax Liability cannot be raised, absent neglect or fraud, four years after incurring the liability, this application has been brought far too late. I have referred to that statutory rule already in this judgment and I now quote that section, as amended:-
(4) (a) (i) In relation to any taxable period ending [1 May 2003] an estimation or assessment of tax under section 23 or 23 may, subject to subparagraph (ii) be made at any time not later than [six years] after the end of taxable period to which the estimate or assessment relates or, where the period in respect of which the estimate or assessment is made consists of two or more taxable periods, after the end of the earlier or earliest taxable period comprised in such period.
(ii) In relation to any taxable period commencing on or after [1 May 2003] and on or after [1 January 2005], in relation to any other taxable period, an estimation or assessment of tax under section 22 or 23 may be made at any time not later than [four years] after the end of the taxable period to which the estimate or assessment relates or, where the period in respect of which the estimate or assessment is made consists of two or more taxable periods, after the end of the earlier or earliest taxable period comprised in such period
(i) After the year in which the deceased person died, lodges a corrective affidavit for the purposes of assessment of estate duty or delivers an additional affidavit under [section 48 of the Capital Acquisitions Tax Consolidation Act, 2003], or
(ii) Is liable to deliver an additional affidavit under the said [section 48] has been so notified by the Revenue Commissioner and did not deliver the said additional affidavit in the year in which the deceased person died
45. I not satisfied that the Appeal Commissioners had jurisdiction to enquire into the validity of this assessment by the tax inspector to V.A.T. liability. Instead, the Appeal Commissioners were concerned with entirely abating the liability, with reducing the amount of the assessment of the tax due, leaving it stand or with increasing it. In other words, they were concerned with the amount of the assessment only. Where jurisdiction might be given in other forms of appeal, and I cannot decide that in this case, any application to cross-examine a tax inspector would have to be dealt with on a case by case basis depending on the issue raised and whether cross-examination was inescapable in order to fairly decide a point. That did not arise here, because that point is outside the scope of this appeal. It was, however, had it arisen within their jurisdiction, within the competence of the Appeals Commissioners to decide that no point involving a capricious assessment, one divorced from a tax inspector having reason to believe that an amount of tax was due, arose in this case. The decision to refuse cross-examination was made within jurisdiction. Were that not so, the effect of extinction of the liability to V.A.T. after the expiry of four years, absent neglect or fraud, under s. 30 of the Value Added Act, 1972, should the cross-examination succeed in showing capriciousness, would bring the hearing into the realm of undermining the orderly collection of taxation and the disposal by early inquiry of substantive points on appeal to the Appeal Commissioners. I would therefore have refused this application, in addition, on discretionary grounds.