Commissioner of Inland Revenue v United Touring Fiji Ltd [2000] FJHC 181; HBA5.1998 (11 August 2000)

IN THE HIGH COURT OF FIJI
AT SUVA
APPELLATE JURISDICTION

CIVIL APPEAL NO. 5 OF 1998
(Court of Review No. 3 of 1997)

Between:

COMMISSIONER OF INLAND REVENUE
Appellant

And

UNITED TOURING FIJI LIMITED
Respondent

Mr. A. Bale and Miss B. Malimali for the Appellant
Mr. R. Smith for the Respondent

JUDGMENT

The Commissioner of Inland Revenue (hereafter referred to as CIR - the appellant) has appealed against the Decision given herein in favour of United Touring Fiji Limited (hereafter referred to as "UTFL" - the respondent) by the Court of Review (hereafter referred to as "CR") on 31 January 1998 holding that:

"The amounts the subject of these appeals disallowed by the Respondent (CIR) in the assessments are to be allowed".

Background history of the case

Prior to 1994 UTC (the Respondent) was a subsidiary of Tourism International (TI) which was owned by British Electric Tradition International (BET). In 1994 TI sold its shares in UTC to Manzoa Ltd, a corporation registered in Fiji. In 1996 UTC was audited for the period 1990 -1994. Adjustments were made to the 1990 to 1993 years. On 29 January 1997 UTC objected to the assessments for 1990-1993; on 6 February 1997 CIR disallowed the objection. UTC filed Notice of Appeal to Court of Review on 5 March 1997 and decision was given on 31 January 1998. Appeal to this Court was filed on 25 February 1998. The last of the written submission was filed in June 1999.

The heart of the matter lies in the ascertainment of the 6% above the agreed 4 million yen which was claimed by UTFL (the Respondent) as deductible income and the disallowance of such claim by CIR. In other words, both parties cannot ascertain the amount that comprise the 6% as deductible or otherwise due to lack of valid information.

The UTFL submits that the accounts disclosed the expenditure concerned and the accounts were audited and the auditors gave evidence that the accounts were properly prepared and properly disclosed all expenses (Record p.411). In 1996 the Commissioner re-assessed UTFL for those years.

Despite the fact that the amount in question was an agreement between the parent company in Japan (UTIJ) and UTFL, the information needed to ascertain the deductible and non deductible amount was missing.

CIR has appealed the decision of the Court of Review claiming that it is still disputing the 6% above the 4 million yen as deductible income. CIR is still left in the dark in regard to what constitutes these representation fees claimed by the taxpayer as deductible income.

Conversely, the CIR is submitting that to grant the amount as deductible income without ascertaining it would be wrong.

It is the appellant’s contention that the taxpayer did not provide the necessary information, so, how can the CIR ascertain the amount claimed?

The Issues which were before Court of Review

There were two issues for resolution by the Court of Review, namely:

1. What price did the respondent (UTFL), a member of a multinational enterprise called the "BET Group" pay for the representation services provided to the respondent by UTIJ (a Japanese company) another member of the BET Group.
   
2. Was that price deductible under s19 of the Income Tax Act.
   

To understand the nature of the issues that arise between the parties it is necessary to set out in some detail the background to and activities of the Respondent which are as follows (as stated by the appellant):

United Touring or UTC is an inbound travel agent responsible for arranging tours for overseas visitors.

It set up separate sales offices in various countries to facilitate this and UTC pays representative fees to these centres for arranging tourists to Fiji.

UTC’s representative Office in Japan is UTIJ. Because major Japanese tour operators will not deal directly with destinations to which they send tourists, they will, in most instances, prefer to deal only with Japanese based offices or representatives of overseas inbound tour operators. As UTC is such an inbound tour operator, they can either maintain a sales office in Japan or work through an appointed representative (Exhibit No. 54, p.69 of Record).

Therefore, all sales from Japan are not directly derived by UTIJ. Some of the sales are derived from other Japanese tour operators or travel agents such as XNT and NEC who then direct these sales to UTC’s appointed representative UTIJ.

In addition to booking clients for UTC, UTIJ provides representation service to the company. This involves negotiating with other agents in Japan, debtors management and handling other administrative matters on behalf of UTC.

The usual set-up for this sort of business is that UTIJ deducts its costs and profit at source prior to remitting the funds. At least, that’s what it does for Australia and New Zealand.

However, in UTC’s case UTIJ remits everything back to Fiji. UTC then pays UTIJ a fee for these services, which in recent years has been set at 4mYen per month.

When the exchange rates for the day were worked out and converted to Fiji dollars, this resulted in an over-claim of representation fees.

UTC contends that the company is entitled to be allowed a deduction for the amounts claimed as representation fees as it was incurred wholly and exclusively for the purpose of its business.

IRD contends that all representation fees have been allowed. What the Department has not allowed is any claim for expenses (accrued or otherwise) over and above the stated contract of 4mYen per month.

Further background is as hereunder as stated (inter alia) by the Court of Review CR which I adopt here (‘Appellant’ referred to is UTFL and ‘Respondent’ is CIR):

The Appellant is a company whose business is the provision of tourist facilities to overseas customers. In order to sell its business in Japan, it employed a Japanese company known as UTIJ. Up to 1994, both the Appellant and UTIJ were owned by the Britith conglomerate, BET.

The Appellant was paying an arranged fee of Y3 million per month to UTIJ for its work in selling the Appellant’s business in Japan. The amount was fixed, no doubt after consideration of the amount of expenses likely to be incurred by UTIJ for the Appellant. It was varied by direction of BET in 1990. Letter number 40 in the bundle Exhibit 1 is an unequivocal direction from Mr. Williams, now a director of BET, to the Appellant to increase the fee to Y4 million per month. Tourism International (South Pacific) Pty Limited was another company controlled by BET at the time.

The Appellant obtained Reserve Bank approval to remit the Y4 million each month. The accounts, however, showed that this figure was not the total amount owing, because UTIJ was to receive, in addition, 6% of the sale figures. Mr. Williams said in evidence that this agreement was to be followed in each subsequent years unless something special happened in Japan.

In February 1994, the Appellant was sold to Mr. White and his associates who took over in 1995. There is no evidence that the Appellant and UTIJ were connected, controlled or associated in any way since the sale up to the present time.

In 1995, after a referral to the Respondent by the Reserve Bank in respect of amounts in excess of the Y4 million monthly already approved for remittal, Mr. Norris, an investigator with the respondent, queried the large amounts that had been shown as owing to UTIJ. He may have had cause to be suspicious, because it could be capital that was being exported from Fiji to Japan under the guise of the payment of expenses. It was shown in the income tax returns for the years 1990, 1991, 1992 and 1993 as "Expenses reimbursed". If it was capital, this money, where it exceeded the Y4 million per month, should have formed part of the income of the Appellant and been subject to tax in Fiji. He disallowed the deductions where they exceeded Y4 million per month.

Court of Review decision

The Court of Review had granted the taxpayer’s plea that the 6% above the agreed 4 million yen was deductible income and that it does not come under section 19(b) of the Income Tax Act of Fiji.

The CIR was criticised for not providing the basis of its assessment and in the Court of Review’s words;

".....really had no definite evidence upon which to disallow deductions."

The CR said that the Commissioner disallowed the deductions and ended up in assuming fraud.

The CR further stated that on the other hand the taxpayer was justified that, it need not prove anything else as the 4 million yen plus 6% as representation fee is deductible according to the agreement between UTIJ and UTFL.

However, the question is whether or not the Commissioner should be the one to discharge the burden of proof. The Income Tax law of Fiji states otherwise i.e. it is the taxpayer who should discharge the burden (section 71(2) of the Act).

This appeal relates to the assessment of the company (UTFL) for the years 1990-1993. During the years in question UTC and UTIJ were related companies. The Court of Review held that the amounts paid by UTC for representation fee in 1990-1993 were allowable deduction.

What is representation fee in this case? It is monies remitted to Japan which represent a reimbursement of costs plus a small profit margin consistent with a mark-up for travel agents.

The CIR contends that it had agreed that UTFL send a 4 million yen per month; but when the accounts were put in, their record shows that for those years they were sending 4m plus 6% extra. It is not known what the 6% is for as no details have been furnished. That is the bone of contention in this case.

Grounds of Appeal

The Grounds of Appeal are:

1. The learned Court of Review erred in law in failing to hold that amounts paid by the Respondent for representation fees in 1990, 1991, 1992 and 1993 were prohibited from deductability by section 19(b) of the Income Tax Act;
   
2. The learned Court of Review erred in law in failing to apply the onus of proof as required by section 71(2) of the Income Tax Act;
   
3. The learned Court of Review erred in law in applying the provisions of the Double Taxation Relief Arrangements with Japan made by Order dated 7 October 1990.
   

Determination of the Grounds of Appeal

I shall now consider the various grounds of appeal and in doing so I will deal with the arguments put forward by both counsel in their very helpful written and oral submissions.

Ground 1 - Applicability of domestic law

This case involves the deductibility of expenses incurred by UTFL for representation fees paid to a related entity UTIJ in Japan between 1990 and 1993. To be deductible the fees must fall within the exclusion provided in section 19(b) of the Income Tax Act. In other words they must have been incurred wholly and exclusively for the purpose of the business of the taxpayer and other entities.

In this case the total expenses incurred by UTIJ relate to sales generated to UTC in Fiji and to other destinations and to income generated for itself. It is therefore necessary to determine which portion of those expenses as incurred is "wholly and exclusively" for the purpose of the business of UTC.

Section 50(1) of the Income Tax Act provides for the "demand for additional information" by the Commissioner for assessment purposes. The CIR has demanded for the needed additional information regarding the breakdown of the representation fee but nothing to properly address the issue was forthcoming, thus the disallowance of the amount claimed as deductible income.

The learned counsel for the Respondent (UTFL) agrees and submits that the issue is not the quantum of the fees paid, but their deductibility and it is only as to that that the issue as to how the total fee was made up was relevant. What CIR was saying was not that there was doubt about more than 4 million yen a month having been paid but what was paid was not justifiable as being not at arm’s length.

This issue should, at no time, be taken lightly. Tax administrators will be failing in their duties if they overlook the importance of properly allocating or categorising the expenditure and income of taxpayers to ascertain which amount is deductible and which is not, according to law. Specifically CIR is looking at expenses which are not deductible as section 19(b) of the Act stipulates.

The CIR has to have all necessary information he needs to be able to properly carry out this duty as taxing officer, especially when dealing with Trans National Enterprises (TNEs) as in this case.

At this point, the question is why was UTFL unable to provide the information demanded by CIR for period 1990 - 1993, when in the past for the years 1984 - 1987 as per exhibit 58, it was supplied.

The learned counsel for the Appellant has set out in his written submission in detail how UTC supplied details of costs and allocation of expenses. He shows the costs incurred by UTIJ for the years 1984 - 1987 and the contributions made by various countries which use UTIJ’s services. In contrast, however, there is no such breakdown for the years 1990-1993. The 1990-1993 figures show how much UTC claimed as "Expenses Reimbursed", but they do not show a breakdown of the expense as was provided for the years 1984 to 1987 (vide exhibit No. 58 page 73 of Record). The account shows sales for the years 1989 to 1995 but does not show how fees were arrived at nor do they show what proportion of UTIJ’s total costs and expenditure were actually incurred by UTC. This is, of course, bearing in mind that UTIJ is the representative office of other countries like NZ and Australia. In this case there was an overclaim of representation fees of $946,904 made up of 1990 - $194,800; for 1991 - $199,586; for 1992 - $301,900 and for 1993 - $258, 54. There was no adjustment to the 1994 year because the monthly remittance (also 4m yen) converted to Fiji dollars did not result in any excess claim.

Although CIR could not prove its suspicion or the fraud it assumed on UTFL, the root of the matter lies in the missing information. CIR has enquired for this piece of information but it has never been provided.

Submissions produced before this court by both counsel revealed that there is still no detailed analysis of the representation fee, especially the 6% extra, which the CIR in the assessment refused to allow as deductible expenses. This is the crux of the matter in this case.

Section 109 of the Act provides that every taxpayer should keep proper accounts of all transactions so as to ascertain profit or loss incurred and to determine deductible and non deductible expenses, and UTFL is no exception. In an article under the caption, ‘Ruling on Transfer Pricing Documentation (Australia) by Dr. John Azzi in Asia - Pacific Tax Bulletin, October 1998 392 at 383 the need to keep proper documentation is also analyzed in the following words:

It is suggested that taxpayers create and keep contemporaneous documentation in order to satisfy statutory requirements to keep records and, in the process, avoid any penalties for non-compliance. It is also noted that taxpayers with adequate documentation are better able to reduce the risk of tax audits and are thus better placed to satisfy the burden of proof that the prices for related-party transactions are set in accordance with the arm’s length principle. Satisfaction of this standard is based on objective criteria.

Consequently, taxpayers with international dealings with associated enterprises are advised to consider the level of certainty they wish to achieve, having regard to the impact of international dealings with related parties that, for instance, are consistently returning losses.

Therefore, in this case since the information was not provided by the taxpayer, the CIR was not in a position to say whether the amount claimed is deductible expenses or otherwise and which has led to CIR’s assessment that the taxpayer is now disputing.

For these reasons I agree with the appellant’s arguments put forward under this ground, I therefore find that the Court of Review with respect erred in law in finding as he did by holding that the representation fees were prohibited from deductibility under s.19(b) of the Act.

The appellant therefore succeeds on the first ground.

Ground 2 - Onus of Proof

This leads me on to a consideration of the second Ground of Appeal i.e. the issue of onus of proof.

When a taxpayer disputes or objects to the Commissioner’s assessments, the onus of proof shall be on the taxpayer. This is provided under Section 71(2) of the Income Tax Act. The taxpayer should discharge the burden and not the Commissioner as the Court of Review seemed to relate.

Due to the vagueness of the taxpayer’s stand in the missing relevant information, that should discharge the burden of proof (once provided), CIR cannot be blamed for having suspicion on UTFL’s dealings. Actually, it is not for the Commissioner to prove his suspicion but for the taxpayer to prove his objection to CIR’s assessment.

To succeed UTC must show that it has paid the fees claimed and that the amounts claimed are attributed to UTC on some proper basis i.e. the arm’s length principle. The traditional transaction methods used to apply the arm’s length principle are three, namely, the Comparable Uncontrolled Price method (CUP), Cost Plus Method and Resale Price Method. The UTC has not shown to CIR on what basis it has come up with the amount charged for services. However, Mr. Smith’s argument in this regard in his written closing submission is as follows:

In an attempt to establish an allowable figure Mr Norris chose the ‘Cost Plus Method’ mentioned in the Commissioner’s Draft Income Tax Ruling (R.281). The Taxpayer chose the comparable uncontrolled Price Method which the Draft Ruling itself says "offers the most direct and reliable way to ascertain the arm’s length principle" (R.280.9) and it offered evidence which in total, established that the charges were entirely reasonable. (See chart, R.72 from the Commissioner’s bundle of documents). The Taxpayer’s specific evidence that it was impossible to get the service as inexpensively any other way was not challenged either and given, in addition:-

1. That Mr White, whose acquisition took the Taxpayer out of the BET stable, chose to continue on the same basis;
   
2. That the overall percentage cost of the service was extremely moderate (see chart @R.72 from the Commissioner’s bundle of documents); and
   
3. That the Taxpayer could have conducted its business so as to make the whole question redundant;
   

it is entirely unnecessary and unfair to draw adverse inferences about something which was a simple process between related companies that produced in the long run what was, on unchallenged evidence, a better result from a Fiji tax perspective than could have been easily engineered by the parties had deception been their intent.

Whatever the argument one cannot ignore the law on the subject of onus of proof based on authorities.

The law as to onus of proof

The law on the subject of onus of proof is quite clear on the authorities.

It is on the taxpayer to show that the assessments were wrong and by how much they are wrong [Section 71(2) Income Tax Act, Buckley & Young Ltd v Commissioner of Inland Revenue (1978) 3 NZTC 61, 271]. On this aspect it was put by Moller J. in Lancaster v Commissioner of Inland Revenue [1969] N.Z.L.R. 589, 591 thus:

the onus of proof on the taxpayer in objection proceedings requires that the final question must always be: "On all the evidence, has the taxpayer discharged the onus of demonstrating that the Commissioner’s assessment was wrong, and if so, why it was wrong, and how far it was wrong?"

It is further stated.

The reason for this statutory onus is obvious enough. The Commissioner could not sensibly be expected to bear the onus of proof of matters which originate with the taxpayer and which usually are peculiarly within his knowledge and power. Thus, there are sound if not compelling practical reasons why the legislation requires him to provide satisfactory evidence to support his calculation of his assessable income. If he fails or is unable to provide sufficient evidence to discharge that onus, his objection to the Commissioner’s assessment will fail.

The Court in Buckley (supra) with reference to Cooke J’s judgment in Duggan v Commissioner of Inland Revenue [1973] 1 NZLR 682, 686 said:

"the onus of proof must be applied in a broad and commonsense way. So that in such an apportionment case as the present the taxpayer must be able to point to some intelligible basis upon which a positive finding can be made that a defined part of the total sum is deductible. Where the Commissioner has refused a deduction and his assessment is challenged, then the taxpayer must establish that the decision is wrong and the extent to which the assessment should be varied. That last matter does not require an answer of absolute precision or one that has been calculated by some kind of scientific process but, unless the taxpayer can demonstrate affirmatively that at least a minimum quantifiable sum is deductible, he will have failed to discharge the onus that for good practicable reasons has been placed upon him by the legislature".

The degree of proof required is on a balance of probabilities (Case Q32 Taxation Review Authority, TRA No. 92/161 (1993) 15 NZTC 5, 150).

Application of law to the facts of this case

On this ground, namely, onus of proof, I am in full agreement with the arguments put forward by Mr. Bale in his written submission.

In the case of deductions such as those claimed here the taxpayer must establish they were incurred "wholly and exclusively for the purpose of its business":[s.19(b)].

Unlike the Buckley case this appeal involves legislation which does not contemplate apportionment of expenses where they are incurred for more than one purpose. Accordingly, the taxpayer must establish that the expenses of the Japan office which were reimbursed could be dissected into distinct and several parts, each of which is directly referable to the taxpayer’s business in Fiji. [See Ronpibon Tin No Liability and Federal Commissioner of Taxation (1948 - [1949] HCA 15; 1949) 78 CLR 47].

In this case the taxpayer has failed to show, on the balance of probabilities, the true amount of expenses reimbursed and that the whole of those expenses were incurred exclusively for the purposes of its business as opposed to the businesses of the Japan office or the other destination offices.

It is not enough for the taxpayer to generally assert that the expenses were incurred for this purpose. The evidence is that the expenses of the Japan office were apportioned between the respective destination offices but there is no explanation as to how this was done and how the individual amounts were calculated.

There is simply no way of knowing whether the amounts remitted by the taxpayer satisfy the right to deduct. What is clear is that the total expenses of Japan office were incurred for multitude of purposes, namely, for the purpose of earning income for the Japan office itself and for the numerous other destination offices.

It is incumbent on the taxpayer to establish which of those expenses have the necessary connection to its business in Fiji in order to be deductible. This the taxpayer has failed to do. The alleged agreement between UTIJ and UTFL is of no moment unless the CIR’s queries are answered.

For these reasons I find that the learned Court of Review with respect erred in law in failing to apply the proper standard of proof. The appellant therefore succeeds on this ground as well.

Ground 3 - Applicability of foreign law

The parties have cited bilateral, regional and international legal instruments to assist in finding an amicable solution to the problem in this case.

It is a universally accepted practice that these foreign legal instruments can only be effective where the domestic law is silent on the issue being dealt with. This is so, even if a country had not ratified such instrument. It is very important to understand that these international legal instruments can only be used when there is a gap in the domestic law of the country and should not be used to override the domestic law, yet proper authorities should be informed.

The UTFL (Respondent) relied heavily on the Convention, namely, Organisation for Economic Co-operation and Development (referred to as OECD). Under the provisions of OECD ‘transfer pricing’ guidelines are set out. In the Preface (item12) it is stated that "transfer prices are significant for both
taxpayers and tax administrations because they determine in large part the income and expenses, and therefore taxable profits, of associated enterprises in different tax jurisdictions".

In our case, it assists the taxpayer and tax administrator to determine the pricing, costing and taxing of the business or trade.

Having said that, the CIR still needed additional information and legally, he is entitled to be given such information (section 50(1) of Act), to properly carry out his duty as a good tax administrator for this country.

Now, the question is whether or not Art 9 of OECD should bar CIR from demanding or obtaining additional information for assessment purposes. In my view, it will be self-defeating to rely solely on transfer-pricing guidelines (Art. 9 of OECD) when CIR knows how to go about in the situation, by asking for additional information.

The Court of Review with respect has diverted itself from the real issue and was just delving on the surface relying on OECD i.e. whether 6% is deductible or not according to the agreement between MNEs [UTIJ and UTFL]. The CR said that the investigator Mr. Norris ‘did not follow the OECD proposals".

Actually, the gist of the matter lies on what amount is deductible and what is not deductible from the incurred expenses based on section 19 (b) of the Act.

The CIR cannot be blamed for being suspicious about the trade between the MNEs and the best way for him to get rid of such suspicion was to ask or demand for additional information.

Japan, Australia and New Zealand are members of OECD and they deduct the money at source. The question is, why not in this case?

The curiosity of CIR calls for additional information and one cannot be too careful in such circumstances to be able to properly administer his duty as tax administrator. The provision of the information demanded by CIR would no doubt resolve these issues of concern and appropriate assessment would eventuate.

OECD and the other legal instruments raised by the parties have done their part in the 4 million plus 6% agreement but the dispute in this case merely calls for an additional information to clarify what the 4 million and 6% are made up of; Conversely, what type of money does the taxpayer claim to be deductible and which the CIR may ascertain in the assessment.

The fact that the taxpayer was not able to produce such vital information is unfortunate because each businessman (taxpayer) should possess detailed information of the day to day running of his/her business even if someone else is running it for him/her. [The principle in The King v. The Federal Commissioner of Taxation; Ex parte Trautwein [1936] HCA 46; (1935-1936) 56 CLR 196].

Miscellaneous matters

There were cases cited by the parties which provided precedents to tax disputes and for assistance in this case. In all these cases, the emphasis rests on the amount taxable and not taxable, deductible and non-deductible. The principle related are that the taxpayer and the tax administrator should work together to arrive at an agreeable amount within the tax legal bounds.

As for the case in hand, the parties are in dispute. The taxpayer did not provide the much needed information and CIR made his own assessment. It has not even been figured out which amount falls in which category (deductible expenses, capital expenditure, assessable income etc) and this is exactly what CIR needed from the taxpayer to be able to make a proper assessment that may resolve the dispute.

In Ronpibon (supra, at page 60] the court said;

"The actual expenditure in gaining the assessable income, if and when ascertained, must be accepted. The problem is to ascertain it by an apportionment. It is not for the Court or the commissioner to say how much a taxpayer ought to spend in obtaining his income, but only how much he has spent. The question of fact is therefore to make a fair appointment to each object of the companies’ actual expenditure where items are not in themselves referable to one object or the other. But this must be done as a matter of fact and therefore not by this Full Court.

This is what CIR and UTFL needed in order to resolve the dispute, the "appointment of each object of the companies’ actual expenditure", to be able to properly assess deductible and non deductible expenses.

I am of the view that without the information that has been demanded by CIR on the taxpayer, the parties will not be able to resolve the dispute amicably.

The facts revealed that the amount deductible was more than the 4 million and then the 6% and that the amount is not static and these have led to the demand for additional information to clear any doubts.

Since the taxpayer did not provide the necessary information and figures similar to the ones it had used to supply in 1984 - 87, the CIR went ahead with his own assessment as a tax administrator and which is now being objected.

The quantifiable sum that needs to be proved or to be demonstrated affirmatively is still missing and which was demanded by CIR. The Accountant’s report was not actually what the CIR was after but the breakdown of money being claimed, especially the 6% extra. Without such information, the onus of proof for objecting to the assessment made by CIR, could not be seen as being discharged as section 71 (2) of the Act stipulates.

Accountant’s Report

The taxpayer relied on the reports compiled by the Accountants that show the figures which comprised the 4 million and 6% representation fee as agreed between UTIJ and UTFL. The issue lies on the suspicious state of the affairs between the MNEs and has been reflected in the figures adduced by the taxpayer as deductible. To clear this suspicion, the CIR requested for additional information regarding the breakdowns of the money transactions which may demonstrate affirmatively the quantifiable sum claimed by the taxpayer.

The CIR was just carrying out his job as the law authorises him to do.

The question is, how can CIR conclude or ascertain that the figures given were the true and correct amount deductible when the information that points to that effect was missing? The dispute rests on section 19(b) of the Act and for CIR to clearly establish whether the expenses claimed were deductible or otherwise, as being "wholly and exclusively expended" for such particular purpose, the taxpayer should provide all necessary information required or demanded by CIR.

Information

The taxpayer argued that the CIR had more information than he accepts. This is a wild argument because the CIR needs all the information it can get to properly administer his role as Fiji’s tax collector/administrator.

Every business, trade, profession etc. that earns money should pay their levy or tax. Each should pay tax according to the law and guidelines, otherwise, this country is robbed and CIR has failed in his duty.

That is why CIR has demanded for additional information.

In my opinion, the taxpayer should not be allowed get away without providing the much needed information, as with respect the Court of Review’s decision has that effect.

For these reasons the appellant succeeds on the third ground of appeal.

Conclusion

To conclude, United Touring Fiji Limited (UTFL) as a taxpayer should provide the information demanded by the Commissioner of Inland Revenue (CIR) according to section 50(1) of the Income Tax Act. Foreign legal instruments should only be used where the National Law is silent, ambiguous or needs interpretation. In the case where the UTFL could not provide the needed information since it has severed ties with UTIJ, negotiations and open discussions between the parties should be facilitated to settle the issue. The CIR has to administer Fiji’s tax system in the best possible way for the protection and best interests of the country and its economy.

I find that the appellant (CIR) has acted correctly in the absence of the information required to be supplied to him. The assessments are therefore confirmed subject however to the respondent (UTFL) satisfying the appellant’s requirements within 30 days of this judgment.

For these reasons the appeal is allowed with costs against the respondent to be taxed if not agreed.

D. Pathik
Judge

At Suva
11 August 2000