1. This
matter comes before the Court as an application for leave to enter final
Judgment against the Defendant on foot of a claim in the sum of
£1,984,626.44 together with interest thereon as endorsed in the Special
Endorsement of Claim on the Summons herein. The matter came before the Master
by way of notice of motion dated the 16 February 1999 and was sent forward for
hearing by the Court.
The
claim is made pursuant to Section 8 of the Criminal Assets Bureau Act 1996 by
the Plaintiff who is an officer of the Revenue Commissioners nominated by the
Revenue Commissioners to exercise the powers and functions of the
Collector-General. The claim is in respect of income tax alleged to be due by
the Defendant in respect of the years ending the 5 April 1988, 5 April 1989, 5
April 1990, 5 April 1991, 5 April 1992, 5 April 1993, 5 April 1994, 5 April
1996, 5 April 1997.
The
Defendant was ably represented by Ms Gabrielle M Wolfe, Solicitor who confined
the defence to four grounds submitting that on these grounds Judgment should
not be entered and that the matter should be sent for plenary hearing.
Specifically no point was raised concerning the right of the Plaintiff to
maintain these proceedings nor was any challenge raised to the formal proofs
which have been submitted to the Court on behalf of the Plaintiff. I have
considered these proofs and I am of the view that they are satisfactory to
maintain the present claim subject to the consideration of the four points
raised by way of defence.
I
now proceed to consider these four points.
The
First Point
The
first point raised by way of defence is that it is submitted on behalf of the
Defendant that the provisions of Section 966(5)(a) of the Taxes Consolidation
Act 1997 constitute the purported vesting in an Inspector of Taxes, who is an
Officer of the Revenue Commissioners, the Judicial function of making a
determination of the tax due by a tax payer which function, since the
certificate of this officer is to be taken as proof of the amount of the tax
due, is one properly reserved for a Judge appointed within the terms of the
Constitution and accordingly the Section is unconstitutional.
Were
it not for the fact that, in my view, this point has already been considered
and rejected by the Supreme Court, I would have adjourned further consideration
of this point and invited a representative of the Attorney General to attend at
the hearing. However, I am in no doubt that the determination by the Supreme
Court of the issues in Dieghan v Hearne and others [1986] IR 603 enables me to
reject this point.
While
it is true that in Dieghan's case the Section under consideration was Section
184 of the Income Tax Act 1967 the reasoning in the Supreme Court in that case
applies to the present legislation.
When
Dieghan's case was under consideration the following was the position. Section
184 of the Income Tax Act 1967 empowered the Inspector of Taxes to raise an
estimated assessment to income tax on a person who had failed to make a return
of income when required to do so. Section 416 provided that in default of a
notice of appeal against the assessment it became final and conclusive. The
Collector-General was empowered by Section 485 to issue a Certificate setting
out that a taxpayer had made default in paying income tax and the County
Registrar or Sheriff was required to levy the sums certified to be in default.
Mr
Dieghan commenced proceedings in the High Court seeking a declaration that the
actions of the Collector-General and County Sheriff together with certain
provisions of the Income Tax Act 1967 were in breach of Articles 34, 37 and 40
of the Constitution.
It
was held by Murphy J dismissing the claim that the task of the Inspector of
Taxes in making assessments was to compute the amount of tax to be paid having
regard to the information provided by the taxpayer. So described, his function
was purely administrative and the fact that the taxpayer was precluded from
disputing an assessment arose by virtue of something akin to statutory estoppel
resulting from the inaction of the taxpayer. With this reasoning Finlay CJ,
Walsh J, Griffin J, Hederman and McCarthy J in the Supreme Court agreed and the
taxpayer's appeal was dismissed.
Under
the provisions of Section 416(1) of the Income Tax Act 1967 a right of appeal
is given to the taxpayer which did not exist at the time the Dieghan Case was
decided. That Section provides that a person aggrieved by an assessment made
upon him by an Inspector is entitled to appeal by giving within 30 days after
the date of the issue of the assessment, notice in writing to the Inspector and
the Finance Act of 1995 provides that an Inspector of Taxes may refuse an
application for an appeal if he feels a taxpayer is not entitled to make such
an appeal. The Inspector is required to notify the Appellant in writing of his
reasons for the refusal. The taxpayer then is entitled to appeal the
Inspector's decision directly to the Appeal Commissioners within 15 days of the
date of the issue of the refusal.
Accordingly
I am in no doubt that the reasoning of the Supreme Court in the case of Dieghan
v Hearne remains valid notwithstanding the changes in legislation since it was
heard.
The
Second Point
The
second submission made on behalf of the Defendant relates to the Waiver of
Certain Tax, Interest and Penalties Act 1993 ("The Tax Amnesty Act").
It
is submitted that the Defendant in this case availed of the provisions of that
Act and that the Plaintiffs are accordingly estopped from pursuing this claim.
The
evidence advanced by the Defendant in support of this claim is contained in
paragraph 8 of the Affidavit of his Tax Consultant, Mr John McGrattan sworn on
the 9 March 1999. In this he says I say and believe that the Defendant has the
benefit of the statutory amnesty under the terms of the Waiver of Certain Tax,
Interest, and Penalties Act 1993 which statutory amnesty affords him a defence
to all attempts to reassess the Defendant for taxes prior to the year 1994.
I
say and believe that to my knowledge from an inspection of the Defendant's
papers for the purpose of this Affidavit that no approach has ever been made
against the Defendant under the appropriate provisions of the Waiver of Certain
Tax, Interest, and Penalties Act 1993 disputing his entitlement to such amnesty.
Section
6 of the Waiver of Certain Tax, Interest and Penalties Act 1993 provides as
follows:
6.
Demands or other requests for payment
Where
in relation to an individual
(a)
The Revenue Commissioners, the Collector-General or any of their or his
Officers authorised in that behalf have demanded or otherwise request the
payment of any tax
(i)
In respect of which a settlement amount has been remitted to the Chief Special
Collector or
(ii)
Which is Value Added Tax in respect of which a remittance has been made to the
Chief Special Collector in accordance with Section 3(6)(a) and Sub-Paragraph B
the individual has been given a Certificate as is referred to in Section 2(2)
or 3(6)(c) in respect of such tax.
The
individual shall produce to the Revenue Commissioners, the Collector-General or
the Authorised Officers as the case may be within 30 days of (z) the date of
making the demand or request or (ii) if later the date he received the
certificate.
The
evidence referred to in Section 2(4)(b) or Section 3(6)(c) as the case may be
and the demand or request shall be withdrawn and the amount of tax specified in
the demand or request shall be discharged
In
my view it is clear that if the Defendant sets up, by way of defence, the 1993
Act it is incumbent upon him to produce to the Court the Certificate therein
referred to. Until that is done no defence has been established. No Certificate
is produced to the Court. Accordingly I reject this submission.
The
Third Point
The
issue that arises in this submission extends to a consideration of whether the
appropriate procedure for the Defendant to adopt for an appeal from the
assessment was the appeal procedure provided for by Section 933 of the Taxes
Consolidation Act 1997 or alternatively Section 416 of the Income Tax Act 1967.
This issue centred around a consideration of whether Section 1097 of the Taxes
Consolidation Act 1997 which provided that in certain circumstances the
obligation to make returns and furnish statements are deemed to come into force
on the 6 April 1997 or whether the procedure provided for by Section 416 of the
1967 remained intact.
In
the circumstances of the case I find it unnecessary to determine this issue
because I am satisfied from the evidence before me that there has been a
failure on the part of the Defendant to comply with either of these Sections.
Section
416, as has been referred to earlier in this Judgment enables a person
aggrieved by an assessment to lodge an appeal with the Appeal Commissioners.
There is no evidence before the Court that the Defendant took this step.
Accordingly even if it be correct that the procedure provided for at Section
416 is the correct procedure, in my view, the Defendant has not complied with
that procedure.
The
Fourth Point
It
is submitted on behalf of the Defendant that the provisions of Section
955(2)(a) of the Taxes Consolidation Act 1997 constituted a defence in this
case.
This
Sub-section provides "Where a chargeable person has delivered a return for a
chargeable period and has made in the return a full and true disclosure of all
material facts necessary for the making of an assessment for the chargeable
period, an assessment for that period or an amendment of such an assessment
shall not be made on the chargeable person after the end of the period of 6
years commencing at the end of the chargeable period in which the return is
delivered and no additional tax shall be payable by the chargeable person and
no tax shall be repaid to the chargeable person after the end of the period of
6 years by reason of any matter contained in the return.
Accordingly,
it is claimed that the Defendant in this case is protected in respect of any
claim dating back prior to 6 years from the date of the claim.
I
am satisfied that this Section must be read as subject to Section 924 of the
Taxes Consolidation Act 1997 which provides:
(1)(a)
Where the inspector discovers that --
(i)
any properties or profits chargeable to income tax have been omitted from the
first assessments,
(ii)
a person chargeable --
(I)
has not delivered any statement
(II)
has not delivered a full and proper statement
(III)
has not been assessed to income tax, or
(IV)
has been undercharged in the first assessments,
.
. . or
(iii)
a person chargeable has been allowed, or has obtained from and in the first
assessments, any allowance, deduction, exemption, abatement or relief not
authorised by the Income Tax Acts,
then,
where the tax is chargeable under Schedule D, E, or F, the inspector shall make
an additional first assessment.
I
am satisfied that the circumstances envisaged by Section 924 exist in this case
and accordingly the Defendant is not protected by the provisions of this
Section.
I
am accordingly satisfied that in approaching this case in a manner approved by
the Supreme Court in First National Commercial Bank plc v England [1996] IR 75
the Defendant has not established to my satisfaction that he has any real or
bona fide defence to be tried by the Court and accordingly I give Judgment for
the Plaintiff in the amount of the claim.