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| Sunday, 19 September 2004 |
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The Assessors right to be heard at the appeal hearing part 7 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. Mr. Stanley Fernando states: "The law does not give the Assessor any Locus Standi or right of representation at the appeal hearing before the Commissioner-General i.e. The Assessor has no right to be heard in support of the assessment. That an assessor has no right of representation at an appeal hearing before the Commissioner-General was first pointed out by Mr. L. O. de Silva, who retired as Commissioner, Inland Revenue. Since then, many others, including Mr. Fernando have raised this as an issue. Even the late Mr. Ambalavanar, the most competent tax consultant ever, used to tell me, when I was Clerk to the Board of Review. "I say, what in this appeal hearing before the Commissioner-General; When I come for the appeal hearing with my client, I see the assessor with the Commissioner-General discussing the case". My reply to him was that the appeal hearing before the Commissioner-General is not a court trial. The Commissioner-General is not sitting there in the capacity of a judge. All what this hearing before the Commissioner-General means is that a that senior and more experienced officer is sitting in judgement on the assessment made by a junior or less experienced officer, initially, with a view to affording relief to an aggrieved taxpayer, if that is possible. Now, to that end he necessarily has to familiarise himself with what had transpired before the hearing of the appeal. The Commissioner-General has multifarious duties to perform. Hence, is cannot be expected to go through in detail all what had transpired in a tax file. Thus, he got to rely on the assessor. The assessor will not merely appraise the Commissioner-General of what had gone before but will be physically present at the hearing to assist the Commissioner-General in the best possible manner. Mr. Fernando's position is that the law does not sanction the assessor's presence at an appeal hearing before the Commissioner-General. The law does not preclude him from doing so either. Of course, the role the assessor plays at these hearings depends on the personally of the Commissioner-General. Some Commissioner-General have not allowed the assessor to put in a word at these hearings. On one occasion, before the hearing commenced the Commissioner inquired from the assessor as to why he made the assessment. The assessor replied that it was made on the orders of the Assistant Commissioner (the present Deputy Commissioner). The Commissioner then told the assessor "Cancel the assessment". When the authorized representative called in with the taxpayer, even before they could sit down the Commissioner said, "I have told the assessor to cancel the assessment". Mr. Fernando would say that this course of action is not sanctioned by law. In law the Commissioner-General should hear and determine the appeal. But the important point to remember is that there is the law and there is the practice. What purpose would be served in the Commissioner-General hearing an appeal which he, from the outset knows has to be annulled. It might interest Mr. Fernando do note that there are many forms of action in appeal procedure and in other areas under the Act which are not sanctioned by law. To take a few; if no agreement is possible with the assessor regarding the appeal, the assessor will submit the file to the Commissioner-General for a hearing. There have been a quite a few instances where, after a part hearing the Commissioner-General had referred the file back to the assessor to see whether a settlement is possible. In some instances this has been done at the request of the authorized representative. Vide Guillain v CIT. Now this course of action is not sanctioned by law. For if no agreement is possible with the assessor in terms of section 117 (5), the Commissioner-General should hear and determine the appeal. That is the law. To take another instance, where no agreement is possible with the assessor, the appellant or the authorized representative may suggest that the appeal be referred to the Deputy Commissioner in charge of the unit. Or the assessor himself may suggest that they see the Deputy Commissioner regarding the appeal. There have been a number of instances where Deputy Commissioners had effected appeal settlements. Now this course of action is not sanctioned by law. The Deputy Commissioner is acting in excess of jurisdiction. In law he should not interfere with the appellate procedure. But the thing to remember is that the work in the department has to be got through. Sticking to the letter of the law may not help to achieve that end. Hence, the practicalities of the situation and expediency have to be taken in to account - unless of course such action violates a mandatory provision of the law or is in any way Prejudicial to the interests of the Appellant or the Revenue. To take another example from an area outside the appeal procedure - proceeding before a magistrate for the recovery of tax. As a matter of practice an officer of an department appears in courts. He takes part in the proceedings. Sometimes the magistrate would make certain inquiries from the officer. All this is not sanctioned by law. On one occasion the department was not represented at a recovery proceeding. The counsel for the taxpayer made submissions as to why the tax should not be imposed as a fine. |
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