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| Sunday, 12 September 2004 |
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The nature of a tax appeal part 6 Observations by Cecil Aluthwela In a series of articles former Deputy Commissioner of (Appeals) Department of inland Revenue Cecil Aluthwela gives his observations on the article titled " On tax appeals - Some reflections" by Stanley Fernando (BA Ceylon) Attorney-at-Law Lecturer and Examiner in Tax Law, Council of Legal Education, Visiting lecturer in Tax Law, Faculty of Law, University of Colombo which appeared in the July 1993 issue (vol.1 No.1) of the Journal of the Institute of Taxation. These observations present different points of view which may be of benefit and interest to the tax paying public. The Inland Revenue Act (Sri Lanka) referred to is Act No 28 of 1979. The sections referred referred to are those in the Act. In dealing with this subject Mr. Fernando starts with a definition of an appeal. He says it is defined as "A complaint to a superior court or tribunal of an injustice done by an interior tribunal." At the outset, I must say that this is not an apt definition for it presumes that "INJUSTICE" has been done in the lower court or tribunal. If this so, all appeals should be allowed. A better and a more apt definition is found in Whartons Law Lexicon; namely "the judicial examination of the decision by a higher court of the decision of an interior court " or "the transference of a case from an inferior to a higher tribunal in the hope of reversing or modifying the decision of the former." Edlesten v L.C.C. (the capitals are mine) or "any application by a party to an appellate court asking it to set aside or reverse a decision of a subordinate court is an appeal within the ordinary acceptation of the term" Nagendra Nath Dey v Suresh Chandra Dey. Having set before him an inept definition of what an appeal is, Mr. Fernando goes on to say, "but the law provides that a person aggrieved by the amount of the assessment (the complainant of the injustice) may appeal to the commissioner-general (if not the perpetrator of injustice, the source and origin of injustice). The law further permits the Commissioner-general of Inland Revenue to require the assessor (the actual perpetrator of injustice) to explore the possibility of a settlement of the injustice. This procedure appears to be a violation of the sacred principle nemo judex in suacausa" (no one should be a judge in his own cause). In view of the fact that Mr. Fernando had set before him an inappropriate definition of what an appeal is, Mr. Fernando labels the Commissioner-General as if not the perpetrator, the source and origin of injustice and the Assessor the actual perpetrator of injustice. Mr. Fernando takes issue with the provision that the taxpayer has to appeal to the Commissioner-General against an assessment. Furthermore, that the Commissioner-General can require an assessor to reach a settlement of the appeal with the taxpayer. Mr. Fernando states that all this is a violation of the sacred principle of nemo judex in causa sua. With all due respect to Mr. Fernando, I must say, that he has got it all wrong. He has misapplied the rule. All what the Latin phrase means is that one should not be judge of ones own cause. One should not sit in judgement in a case in which one has a personal interest. I will refer to two cases where the principle has been aptly applied. Egerton v Lord Derby was a case, where the Court of Chancery resolved that the Equity Judge in Chester was incompetent to judge a case in which he was himself a party. A perfect example of the offence against this rule was the case Dimes v Grand Junction Canal. Here Lord Chancellor, Cottenham affirmed a number of decrees made by the Vice-Chancellor, in favour of the Canal Company in which Lord Cottenham was a shareholder. The House of Lords set aside the decrees in view of the fact that Lord Cottenham was a shareholder of the Canal Company. Having set them aside, the House of Lords proceeded to deal with the case on merits and in so doing affirmed the decrees of the Vice-Chancellor. The House of Lords observed that Lord Gottenham's decision was in no way influenced by the fact that he was a shareholder. In the House of Lords, Lord Campbell said "no one can suppose that Lord Cottenham could be in the remotest degree influenced by the interest that he had in this concern; but my Lords it is of the last importance that the maxim, that no man is to be the judge of his own cause should be held sacred." So this is all what the rule is about. Now, can it be said that the Assessors or the Commissioner-General have a personal interest in the appeals they handle? Can it be said, as Mr. Fernando would want us to believe, that the appellate procedure under the Inland Revenue Act "Enables the judges to be judges of their own cause." I think it is unnecessary to even give it a thought. Of course, if the Commissioner-General or an Assessor is a director of a company, he should not deal with an appeal, where the company is the appellant. If they do, then the maxim will come into operation. Hence Mr. Fernando's contention that the appeal procedure before an assessor and the Commissioner-General offends the maxim "Nemo Judex in Causa Sua" is based on a misapplication of the rule. |
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