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| Sunday, 28 November 2004 |
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Applicability of the Evidence Ordinance in Appeal Hearings 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 to are those in the Act. What is more, the Court will be extremely reluctant to disturb a finding of fact by the Appellate Revenue Authorities if there is some evidence to support it, though the Court itself may have reached a different conclusion on the facts - vide Leeming vs.Jones. In Foulds vs.Clayton, the Court had some doubt as to whether the Commissioners had accepted the taxpayer's evidence in toto. Yet the Court did not disturb the finding of the Commissioners. In Dickson vs.Abel the Court went further. The Court felt that the appellant's evidence would have given rise to deep suspicion, however as the Commissioners had accepted it and as there was none to the contrary, the Court did not set aside that evidence. Apart from the above, Revenue Authorities and Revenue Tribunals have decided and determined cases on ex parte statements made by the appellants representatives in the absence of the appellant where no cross examination was possible. It is not unknown for authorized representatives to have settled the liability of their clients adducing evidence, even on living expenses in the absence of the appellants - a matter on which the appellant alone can testify. The evidence given by authorized representatives on behalf of their clients is certainly not lawful evidence. Further, Revenue Authorities and Revenue Tribunals have decided and determined the liability of the appellants based on evidence obtained from the returns and accounts of other taxpayers. A case that readily comes to my mind is Gamini Bus Company Ltd.vs.C.I.T. In this case the taxpayer's was settled on the basis of the ratio of petrol and oil to receipts of seven other bus companies and not an lawful evidence. What would have been the ratio if the assessor had considered the ratio of five instead of Seven Bus Companies. Would not the ratio have been different, if the assessor had considered nine bus companies instead of seven. In any event, there are a number of factors which will vary the ratio between different bus companies. For example the terrain of the route on which the buses ply. The South Western Bus Company ran on the roads of the South West of Ceylon. Whereas the Silver Line Bus Company ran in the Central Hills. Thus necessarily the ratios of both will not be the same. Further the age of the buses, the road conditions are yet other factors. Notwithstanding all this, the estimates of the Revenue Authorities were upheld even in the Privy Council. The names of the bus companies were not disclosed to the appellants in view of the secrecy provisions in the Income Tax Ordinance. Now are all these facts and circumstances acceptable to the law ? Is it lawful evidence ? I think not. The fact of the matter is that the Revenue Authorities and Revenue Tribunals can proceed to act on whatever evidence that is placed before them. Their duty is to weigh and balance the evidence before them and reach a rational conclusion. They are not required to look at the evidence through a microscope, nor on the other hand through a Nelsonian eye. They should be just, fair and impartial. In short they should not violate the rules of Natural Justice. Now what are these rules ? They are set out in Lord Dennings work - The Discipline of Law. To quote "The rule against bias is one thing. The right to be heard is another. These two rules are the essential characteristics of what is often called Natural Justice. They are the twin pillars supporting it. The Romans put them in two maxims. Nemo judex in causa sua and Audi alteram partem". If the Revenue Authorities or a Revenue Tribunal violates these rules the Courts will intervene. In P. Nadesan.vs.Commissioner of Inland Revenue, Court intervened on behalf of the taxpayer on the ground that the appellant was not provided with an opportunity to meet the case against him. To quote "It is a clear principle of law that a person should be heard before an order is made against him. We are of the view that the principles of natural justice have not been observed in this case". Continued next week |
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