Khera v Fiji Revenue & Customs Authority [2015] FJHC 120; HBC122.2013 (26 February 2015)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. 122 of 2013

BETWEEN:

MANOJ KUMAR KHERA of 26 China Garden Street, Nausori, Fiji, Businessman
Plaintiff

AND:

FIJI REVENUE AND CUSTOMS AUTHORITY a body corporate duly constituted under the Fiji Revenue and Customs Authority Act 1998 and having its registered office at Revenue House, 1 Ratu Sukuna Road, Suva, in Fiji.
Defendant

Appearance : Mr Naco A., Counsel for the Plaintiff
Ms Malani R., Counsel for the Defendant

Date of Judgment: 26 February 2015

JUDGMENT

[1] The Notice of Motion was filed on 3 May 2013 and together with Writ of Summons and the Plaintiff sought the following Orders:

"1. An Interim Order that the Departure Prohibition dated 22nd March 2010 be revoked to allow the Plaintiff to travel to and attend the Jewelry Conclave in Sydney Australia scheduled for the 21st and 22nd May 2013.

2. UNLESS the Defendant returns the Plaintiff's Accounting Source Documents including and particularly as contained in the Amended Grounds of Appeal filed 19th April 2013 within seven (7) days that following Orders be granted:

(a) that the Notice of Assessment dated 15th July 2005 and the Amended Notice of Assessment dated 1st June 2006 be permanently stayed; and

(b) that the Departure Prohibition Order dated 11th March 2010 be revoked; and

(c) that the Garnishee Notice dated 7th April 2006 be rescinded; and

(d) that all monies paid under the Notice of Assessment dated 15th July 2005 and Amended Assessment dated 1st June 2006 be refunded; and

(e) that the Defendant be precluded from taking any further action under the Notice of Assessment dated 15th July 2005 and the Amended Assessment dated 1st June 2006.

3. That the costs of this application be summarily assessed by the Court.

4. Such other or further remedies that this Honorable Court deems just and expedient.

[2] The Plaintiff relied on the Affidavits of Manoj Kumar Khera and Arun Kumar Narsey sworn on the 1st day of May 2013 and filed in support of the application.

[3] At the outset, I state that when the matter was mentioned before this court on 25 August 2014, Mr Naco A counsel appeared for the Plaintiff and Ms Malani counsel appeared for the Defendant and agreed to abide by the order made in this case in Case Nos. 123 and 121.

[4] The Plaintiff by the Affidavit sworn on 1 May 2013, stated inter-alia:

4.1 That the Plaintiff is the son of Amarsi Maganlal Garana ("Maganlal") who in the early 1980s was working with Lords Jewelers in Fiji. His father Maganlal began his own jewelry business in the name of Mahakali Jewelers in 1991 in Nadi. The business over the years eventually grew to five(5) outlets in locations including Nausori, Nadi, Ba and Lautoka. Later operation of Mahakali Jewelers was ceased and began trading as Shivam Import and Exports which was later registered as a limited liability company by the name of Shivam Imports and Exports Limited, (Annexure "MKK1" true copies of the Certificate of Incorporation Memorandum and Articles of Association for Shivam Imports and Exports Limited).

4.2 On or about July 2004, the shop premises at Nausori were attended to by three (3) Fiji Revenue and Customs Authority ("FRCA") employees namely Shivneel, Doris and their team leader Ms Vanua Bainimarama. The FRCA staff had demanded accounting source documents which they said the Plaintiff had in his possession. They had come without a search warrant and seized sales books, files, balance sheets, bank statements and three boxes of books (the "Accounting Source Documents").

4.3. During the Search and Seizure of the Plaintiff's Source Documents there were repeated requests for "hidden documents" which the FRCA staff said were "not there". In cooperation with the FRCA staff, the Plaintiff instructed his staff to look for anything that was specifically requested, however, nothing was found and the FRCA staff eventually left.

4.4 The audit took approximately a year and the Defendant informed by letter dated 15th July 2005 referring to the finalization of the 2002-2003 Value Added Tax (VAT) Audit which enclosed a summary of assessments which FRCA alleged the tax liability as $3,464,965.98 (Three Million Four Hundred and Sixty Four Thousand Nine Hundred and Sixty Five Dollars and Ninety Eight Cents) ("Initial Notice of Assessment"). The basis of the assessment was FRCA's contention that VAT returns were processed with allegedly fraudulent and or missing invoices, (Annexure marked "MKK2" a true copy of the Initial Notice of Assessment dated 15th July 2005).

4.5 On 15th July 2005, in pursuance to Section 64A of the Value Added Tax Decree 1991, the Commissioner of Inland Revenue, Mr Tevita Banuve sanctioned a Departure Prohibition Order ("2005 DPO") against the Plaintiff for an unpaid VAT assessment $3,464,965.98 (Three Million four Hundred and Sixty Four Thousand Nine Hundred and Sixty Five Dollars and Ninety Eight Cents).

4.6 By letter dated 19th August 2005, FRCA demanded alleged Tax arrears and penalties in the sum of $3,502,864.11 (Three Million Five Hundred and Two Thousand Eight Hundred and Sixty Four Dollars and Eleven Cents), (annexure marked "MKK4").

4.7 On 27th September 2005, in the absence of any Accounting Source Documents to verify the Schedule of Discrepancies, the Plaintiff had raised an objection to the Notices of Assessment dated 15th July 2005.

4.8 By letter dated 24th March 2006, FRCA advised the ANZ Bank pursuant to Section 63 of the VAT Decree 1991, a Garnishee Notice was placed on the Plaintiff's account.

4.9 On 31st March 2006, the FRCA wrote to ANZ Bank advising them that the Garnishee notice had been revoked as arrangements have been made for the tax liability.

4.10 On 7th April 2006, a further Garnishee Notice was sent by the Defendant to the ANZ Bank placing a Garnishee Notice on the Plaintiff's account.

4.11 By the letter 1st June 2006, the Commissioner of Inland Revenue partially allowed the objection and raised an amended notice of assessment (the "Amended Notice of Assessment"). The amended assessment assessed VAT liability as $1,074,373.78 (One Million Seventy Four Thousand Three Hundred and Seventy Three Dollars and Seventy Eight Cents), (Annexure marked "MKK5" of the letter dated 1st June 2006).

4.12 On 24th July 2006, the Plaintiff filed a Notice of Appeal via his solicitors Mehboob Raza and Associates, in disagreement of the Amended Notice of Assessment dated 1st June 2006, (Annexure marked "MKK6" of the Notice of Appeal filed 24th July 2007).

4.13. On 6th September 2007, the Defendant filed a Statement of Response to the said Notice of Appeal, (Annexure marked "MKK7").

4.14 On 30th April 2008, the Plaintiff's solicitor Mr Raza filed a Notice of Motion seeking order on the Commissioner of Inland Revenue and or FRCA to produce all documents which form the basis of the Plaintiff's alleged Tax Liability. In support of the Notice of Motion, the Plaintiff swore an affidavit on 30th April 2008, (Annexure marked "MKK8" a true copy of the said Notice of Motion and Affidavit filed 30th April 2008). The Plaintiff deposed in the said Affidavit that in the absence of the Accounting Source Documents the Tribunal would not have full disclosure of this matter.

4.15 On 10 June 2008, the Acting National Manager Legal Services for FRCA, Mr Bhupendra Solanki wrote to the solicitors of the Plaintiff stating that they would not be opposing the Plaintiff's Notice of Motion dated 30th April 2008 (Annexure "MKK8"). Mr Solanki further advised that they would photocopy all the relevant documents that is required for the purposes of hearing of the appeal, would also make a set of photocopies of the documents available to the Tribunal and have the documents delivered by approximately 27th June 2008, (Annex marked hereto and mark "MKK9" a true copy of the letter dated 10th June 2008).

4.16 On 9th July 2008, the Commissioner of Inland Revenue, Mr Jitoko Tikolevu in pursuance of Section 64 of the Value Added Tax Decree 1991 revoked the Departure Prohibition Order dated 15th July 2005.

4.17. On 11th March 2010, the Commissioner of Inland Revenue, Mr Jitoko Tikolevu in accordance with Section 31 of the Tax Administration Decree 2009 issued another Departure Prohibition Order against the Plaintiff for the alleged unpaid tax assessed at $3,874,046.65, (Annexure marked I annex hereto and mark "MKK10").

4.18 On 6th December 2010, the National Manager of the Debt Management and Lodgment Enforcement Units advised the Plaintiff that the March 2010 DPO would be revoked if the sum of $600,000.00 (Six Hundred Thousand Dollars) was paid up front with further monthly installments of $$5,000 (Five Thousand Dollars) commencing January 2011, (Annexure marked "MKK11").

4.19 On 6th October 2011, a Demand letter pursuant to Section 3(1) of the Tax Administration Decree 2009 demanded the income returns for the years 2006, 2007, 2008, 2009 and 2010. On even date the Plaintiff received a VAT Demand letter pursuant to Section 22(1) of the VAT Decree 1991 demanding the furnishing of VAT returns. Similar letters were received for Mahakali Jewelers Limited and Shivam Import and Exports Limited, (Annexure marked "MKK12").

4.20 By the 7th October 2011, a letter addressed to Shivam Import and Exports Limited from FRCA advised that FRCA would only facilitate the revocation of the Departure Prohibition Order upon the down payment of $600,000.00 (Six Hundred Thousand Dollars) and further monthly installments of $10,000.00 (Ten Thousand Dollars) commencing October 2011 for three months to be reviewed in December 2011, (Annexure marked "MKK13").

4.21 On 17th October 2011, the Plaintiff received a further letter from FRCA which advised that they had received a $50,000 payment and would not review the March 2010 DPO unless further $300,000 is paid without prejudice. (Annexure marked "MKK14").

4.22 By the letter dated 2nd November 2012, the Plaintiff informed the Chief Executive Officer of FRCA, Mr Jitoko Tikolevu and the National Manager for Debt Management Mr Visvanath Dass that the Plaintiff was not happy with the way the case was being handled and stated that ninety percent of the arrears constituted penalties imposed and to review the case by an independent team, (Annexure marked "MKK15").

4.23 By the letter dated 6th December 2012, FRCA advised that they would no longer review the Plaintiff's case in the absence of "any documentary evidence", (Annexure marked "MKK16").

4.24 In light of Annexure "MKK16" and the VAT Tribunal's directions to file written submissions as the matter was being called to fix a hearing date on 8th April 2013, Mr Raza solicitor for the Plaintiff advised the VAT Tribunal that the post Notice of Motion dated 30th April 2008, had received a letter from Mr Solanki, the then FRCA's Acting Manager Legal Services advising that the FRCA would provide both the Plaintiff and the Tribunal with photocopies of all relevant documents. The letter went on to advise that the documents still had not been received and as a result Mr Raza was not in a position to file submissions until he receives the said documents which are pertinent to the case, (Annexure marked "MKK17" the letter dated 16th January 2013).

4.25 On 19th March, the Plaintiff instructed Lal Patel Bale Lawyers to represent him in the Income Tax appeal and as a result a Notice of Change of Solicitors was filed on even date, (Annexure marked "MKK18" a true copy of the said Notice of Change of Solicitors).

4.26 On 19th April 2013, the Plaintiff filed an Amended Grounds of Appeal stating that the Commissioner of Inland Revenue had seized all Accounting Source Documents and largely disallowed VAT returns on the basis of alleged missing and or fraudulent invoices, that seizure of such documents precluded the Plaintiff from comprehensively disputing the alleged liability and despite repeated promises to return the said Accounting Source Documents, FRCA had failed to do so and had placed both a Garnishee and Departure Prohibition Order against the Plaintiff (Annexure marked "MKK19" a true copy of the said Amended Grounds of Appeal filed on 19th April 2013).

4.27 The Garnishee Order against the Plaintiff has been raised on the basis of alleged VAT liability and penalties imposed. The Commissioner of Inland Revenue caused search and seizure of all Accounting Source Documents then raised an assessment to which the Plaintiff was not able to comprehensively dispute the Schedule of discrepancies. Despite this, FRCA has maliciously placed a Garnishee Order against the accounts and numerous Departure Prohibition Orders in order to force the Plaintiff to make payment of the alleged tax liability.

4.28. The Plaintiff was legally advised and verily believes that FRCA cannot use legal remedies such as a Garnishee or Departure Prohibition Order to force a taxpayer to pay tax but may only issue a Departure Prohibition Order to stop the Plaintiff from absconding without paying the tax that is due or providing adequate security for its payment. Despite this, the Commissioner of Inland Revenue has maliciously used both the Garnishee and Departure Prohibition Order to force the Plaintiff to pay the tax. (FRCA letters dated 6th December 2010; 7th October 2011 and 17th October 2011); (Annexures "MKK11"; "MKK13"; and "MKK14"). As a result and under duress, threat, promise and inducement, the Plaintiff paid the sum of $350,000 to the Defendant as follows:

4.28.1 12th October 2005 - $10,000 Receipt No. 5168197

4.28.2 22nd November 2005 - $10,000 Receipt No. 5177688

4.28.3 4th January 2006 - $10,000 Receipt No. 5188344

4.28.4 12th April 2006 - $10,000 Receipt No. 5209659

4.28.5 17th October 2011 - $50,000 Receipt No. 5690625

4.28.6 3rd November 2011 - $80,000 Receipt No. 5697477

4.28.7 1st November 2011 - $70,000 Receipt No. 5697028

4.28.8 15th November 2011 - $100,000 Receipt No. 5698713

4.28.9 16th January 20152 - $10,000 Receipt No. 5713710

The Plaintiff made a further payment of $44,000 as well as a payment of $4,900 to the Defendant to which he does not have receipts, (Annexure marked "MKK20").

4.29. The Plaintiff has been living in Fiji since 1984 where he had attended school and subsequently managed the family jewelry business. The Plaintiff is a Fiji Citizen with a Fiji Passport Number 775382, (Annexure marked "MKK21").

4.30 The Plaintiff married Hetal Ratilal Soni on 3rd June 1999 at the Lautoka Registry in Fiji and he continued to live in Fiji since then, (Annexure marked "MKK22" copy of the Certificate of Marriage).

4.31 The Plaintiff has two children born on 5th April 2000 and 19th May 2003 respectively, (Annexure marked "MKK23" copy of birth certificates).

4.32 On 19th December 2001, the Plaintiff purchased a property at 26 China Garden Manoca in Nausori Fiji where he reside, (Annexure marked "MKK24").

4.33 The Plaintiff has a mortgage over his property to ANZ Bank and makes regular monthly installments in the sum of $785 (Seven Hundred and Eighty Five Dollars) per month. (Annexure marked "MKK25").

4.34. The Plaintiff owns three vehicles, namely a Suzuki Hatchback, a Toyota Corona and Hyundai Tucson, (Annexure marked "MKK26" true copies of the said vehicles third party policies and loan details with Credit Corporation).

4.35 The Plaintiff's assets are in Fiji including his home and business and therefore he states he has very strong ties to Fiji. The Plaintiff has no residency for any other country other than his Fijian Citizenship.

4.36 The Plaintiff has four(4) staff and rent his business premises in Nausori. The Plaintiff is involved in the day to day operation and management of Shivam Import and Exports which primarily deals with jewelry wholesale and retail. Therefore, his employees and his family are heavily dependent on him for their livelihoods.

4.37. The Plaintiff is under legal advice and verily believes that he does not meet the requirements for the issuance of a Departure Prohibition Order. The Plaintiff stated he has significant interests and financial commitments in Fiji which clearly reflects that he is not a flight risk. FRCA has applied and revoked the Departure Prohibition Orders which has allowed the Plaintiff to travel from time to time. During these travels he has always returned to Fiji, (Annexure marked "MKK27" true copies of the passport travel pages showing Plaintiff's travels).

4.38 The Plaintiff required to attend an exclusive Indo-Australian Jewelry Conclave (the "Conclave") being held at the Sheraton on the Park in Sydney, Australia on 21st and 22nd May 2013. This Conclave is being hosted by the Gem and Jewelry Export Promotion Council and is a jewelry sourcing even involving selecting Indian Jewelry manufacturers and leading retailers and buying groups from the US, Europe and Russia, (Annexure marked "MKK28" a true copy of the letter of invitation to attend the Indo-Australia Jewelry Conclave).

4.39 The Plaintiff is willing to provide a surety being Mr Arun Kumar, so that the Departure Prohibition Order against him can be removed to allow him to travel to the Conclave in Australia. The Plaintiff stated that Mr Arun Kumar a businessman in Nausori and proprietor of Vallabhai Sweets. He is a Fiji Citizen and has assets including a house in Nausori worth in excess of $600,000 (Six Hundred Thousand Dollars) and two cars including a Hyundai Tucson, (Annexure marked "MKK29" a true copy of Mr Kumar's passport identify pages and business licence for Vallabhai Sweets).

4.40 The Plaintiff has been defending this matter since the Search and Seizure in July 2004 and the subsequent assessments, garnishee and Departure Prohibition Orders in July 2005. This matter has now spanned almost nine years. The Plaintiff suffered considerable anguish and distress from the issuance of the Departure Prohibition Orders he is unable to travel out of Fiji for business even though he has always had every intention to return to Fiji to continue the management and operation of his business and support of his family.

4.41 The family business has also suffered as a result of the Plaintiff's inability to travel. They originally had five outlets in various locations including Nausori, Nadi, Lautoka, and Ba. As a result of the downturn in business operating two outlets as a direct result of Plaintiff's inability to travel and meet with suppliers for jewelry selection and negotiation. The Plaintiff has read the Affidavit of Mr Arun Kumar Narsey sworn 1st May 2013 and agrees with the contents therein.

[5] In reply to the Affidavit of Manoj Kumar Khera, the Defendant filed its Affidavit sworn by Visvanath Dass Manager Debt Management Unit of the Defendant and stated inter-alia:

5.1 The Defendant is not aware of the contents of the paragraph 1 and 2 of the Affidavit of the Plaintiff.

5.2 In response to paragraph 3, 4 and 5, the Defendant stated that the matter is before the Tax Tribunal vide Income Tax Appeal No. 3 of 2006 therefore the Defendant will not respond to the same.

5.3 The Defendant states that the DPO was sanctioned against the Plaintiff on the 15th July 2005 for an unpaid VAT assessment $3,485,432.68, (Annexure marked "VD-A" is a true copy of the letter dated 15th July 2005).

5.4 In replying to paragraph 5 of the Plaintiff's Affidavit, the Defendant stated that the matter is before the Tax Tribunal vide Income Tax Appeal No. 3 of the 2006 therefore, the Defendant will not respond to the same. .

5.5 The Defendant placed a Ganishee Order on the Plaintiff's ANZ Account. The Defendant wrote to the ANZ Bank advising that the Garnishee Notice had been revoked as arrangements for Income Tax owned have now being made directly with the Defendant and not as that arrangement being made for the tax liability as stated by the Plaintiff, (Annexure marked "BD-B" is a true copy of the said letter dated 29th March 2006 and 20th April 2006).
5.6 The Defendant admitted issuing Garnishee Order on 7 April 2007, (Annexure marked "VD-B").

5.7 In response to paragraph 12, the Defendant stated that the matter is before the Tax Tribunal vide Income Tax Appeal No. 3 of 2006 therefore will not respond to the same.

5.8 The Defendant admitted the filing of Notice of Appeal on 24 July 2006 and the Defendant Response dated 6 September 2007.

5.9 In response to paragraph 15, the Defendant stated he was aware of the same therefore cannot admit nor deny this. The Defendant agrees to the extent that the notice of motion and affidavit was filed on the 30th April 2008.

5.10 That paragraph 16, 17, and 18 are admitted i.e:

(a) The letter dated 10 June 2008 by FRCA that they would not oppose the notice and make available the photocopies of documents the Plaintiff required;

(b) The Defendant revoked the Departure Prohibition Order dated 15 July 2005.

5.11 The paragraph 19 is agreed to the extent that the letter was a result of a meeting discussion commitment by the Plaintiff to the Defendant whereby it was mutually agreed that the Revocation of DPOs on the Plaintiff would be facilitated if $600,000.00 is paid up front with a monthly installment of $5,000.00 commencing January 2011.

5.12 The Defendant is not aware of the VAT Demand Letter dated the 6th October 2011 as the annexure marked "MKK11" does not have any signature of the Defendant. However, the two Income Tax Demand Letters dated the 6th of October (case number: 229320 & 229666) is agreed upon.
5.13.The Defendant agreed, but for annexure "MKK12" stated that this letter was in response to the Plaintiff's initial correspondence dated the 14th September 2011 and 29th September 2011. The Defendant had informed the Plaintiff that the Defendant will only facilitate the revocation of DPO against the Plaintiff upon the down payment of $600,000.00 (Six Hundred Thousand Dollars) and a monthly installment of $10,000.00 from October 2011 for the next three months to be reviewed at the end of December 2011. Furthermore, the Defendant stated that DPO can only be removed if the Plaintiff settles the tax debt or makes arrangement to settlement the tax debt subject to the satisfaction of the Defendant.

5.14. The Defendant admits the receipt of $50,000.00 and will only consider any reviews whatsoever upon settlement of $300,000.00 "without prejudice". Furthermore the Defendant states that DPO can only be removed if the Plaintiff settles the tax debt or makes arrangement to settle the tax debt subject to the satisfaction of the Defendant.

5.15 The contents in paragraph 23 of the Plaintiff's Affidavit is admitted ("MKK15").

5.16. The Defendant stated that the Authority will not review the Shivam Imports & Exports Limited in absence of any concrete documentary evidence of Shivam Imports & Exports Limited claims.

5.17 The paragraph 25, 26 and 27 are admitted (MKK16, Mkk17 and MKK18).

5.18 The Defendant replying to the paragraph 28 of the Plaintiff's Affidavit again reiterates that the Defendant is empowered by law to issue garnishee despite the objection period not being exhausted. The Defendant stated that the imposition of DPO on Plaintiff is as a result of the tax liability owed by the Plaintiff. Furthermore, the Defendant states that the Defendant has a statutory role to collect tax owed to the State therefore the State would be more prejudiced if the DPO is removed without any settlement of tax debt by the Plaintiff. The Plaintiff had been given time during the audit and objection processes and now during the current Tax Court to provide the required accounting source documents to substantiate their VAT return lodgments. Where the Plaintiff is unable to fulfill their basic obligation they are consequently shifting the burden of proof to the Respondent. This is contrary to Section 21 of the Tax Administration Decree (TAD).

5.19 In response to paragraph 29. The Defendant stated that the Defendant has a statutory role to collect tax owed to the State therefore the State would be more prejudiced if the DPO is removed without any settlement of tax debt by the Plaintiff. The Defendant is empowered to place a Garnishee or DPO pursuant to Section 27 and Section 31 of the Tax Administration Decree 2009. That the Defendant agrees that a payment of $350,000.00 was paid to the Defendant. However payments Receipt No. 5168197 & Receipt No. 5177688 were distributed to Amarshi Prakash Garana and Amarshi Maganlal Garana whereby $5,000.00 each was distributed to their accounts respectively.

Moreover in regards to payment of $44,000.00, The Defendant is not aware of the same.

5.20. The Defendant stated in response to paragraph 30, he is unaware of the contents of 31, 32, 33, 34, 35, 36, 37, and 38 and neither admit not deny.

5.21. In replying to the paragraph 38 is not admitted nor denied, and the Defendant stated that pursuant to the Tax Administration Decree, DPO can only be removed if tax liability is settled or tax payer has entered into an arrangement to the satisfaction of the Defendant, and there has been no instance where DPO is revoked to allow taxpayer to travel for business purposes.

5.22 In response to paragraph 40 the Defendant stated that pursuant to the Tax Administration Decree, DPO can only be removed if the tax liability is settled or tax payer has entered into an arrangement to the satisfaction of the Defendant. The Plaintiff's surety's net worth is insufficient to settle the existing debt.
5.23 That paragraph 41 is not admitted nor denied. The Defendant reiterates that pursuant to the Tax Administration Decree, DPO can only be removed if tax liability is settled or tax payer has entered into an arrangement to the satisfaction of the Defendant.

5.24 In response to paragraph 42, the Defendant stated it is not denied or admitted.

[6] Arun Kumar Narsey, the Chartered Accountant and Principal of AM Narsey & Co. sworn the affidavit dated 1 May 2013 in support of the Notice of Motion dated 2 May 2013 filed by the Plaintiff and stated inter-alia.

6.1 He was handling the accounts of the Plaintiff since 2013.

6.2 Except for the contents of the paragraphs stated below, Arun Kumar had reiterated the contents of the affidavits of the Plaintiff dated 1 May 2013 and there is no necessity of repetition.

6.3 Arun Kumar stated he had an opportunity to briefly review the Financial Statement of Shivam Imports and Exports Limited for the years 2006 through to 2011 inclusive which clearly reflect the continuing downturn in business. As at 31 December 2006, the Business recorded a net loss of $119,987. In 2007, a further loss of $779 was recorded followed by nominal profits in 2008 to 2010 inclusive of $11,569; $13,791; and $16,955 respectively. As at 31 December 2011, the business recorded an escalated net loss of $23,084 in 2011, (annexure "AN1" a true copy of the Financial Statements for the years 2006, 2007, 2008, 2009, 2010 and 2011).

6.4 He further stated on or about 8th February 2013, Narsey attended a meeting at Level 4, Building 3 of the FRCA Complex with Ms Rasala Malani and Ms Vanua Bainimarama to discuss the Plaintiff's matter. During the meeting it was agreed that FRCA would provide a Schedule of Discrepancies in respect of their audit with all supporting documentation, (annexure "AN2" a true of the file notes from the said meeting).
6.5 On or about 19th February 2013, Narsey attended a further meeting at Level 4, Building 3 of the FRCA Complex with Ms Rasala Malani and Ms Vanua Bainimarama to further discussions upon receipt of the Schedule of Discrepancies. It was again requested of FRCA to provide copies of the alleged false invoices and other supporting documentation, (annexure "AN3" a true copy of the file notes from the said meeting).

6.6 On 5th March 2013, Narsey still had not received the requested documentation so he wrote to FRCA's Ms Rasala Malani to request an update and a time frame as to when we would expect the information requested, (annexure "AN4" a true copy of the said letter dated 5th March 2013).

6.7 On or about 11th March 2013, having not received the requested documentation, Narsey went to see Ms Rasala Malani to check on the progress of this information being provided to my office. She was not available and as a result phoned later that afternoon to say that she had received my letter of 5th March 2013 (annexure "AN4") and that Ms Vanua Bainimarama was now going through their records and would get back to him on the provision of documents by the end of the week, (annexure "AN5" a true copy of the file notes from the said telephone call).

6.8 The affirmant prayed for the orders in terms of the Plaintiff's summons.

[7] Mr Visvanath Dass of the Defendant filed the reply to the affidavit of Arun Kumar Narsey and stated inter-alia.

7.1. The paragraph 1 is admitted and he is unaware of the contents of the paragraph 2.

7.2. That in response to paragraph 3 and 4, he was aware of the same therefore he stated he cannot admit nor deny, and the matter is before the Tax Tribunal vide Income Tax Appeal No. 2 of 2006 therefore he will not be responding to same.

7.3 Furthermore, the Defendant stated that the Defendant has a statutory role to collect tax owned to the State therefore the State would be more prejudiced if the DPO is removed without any settlement of tax debt by the Plaintiff.

7.4 That as to paragraph 5, the Defendant stated that DPO can only be removed if tax liability is settled or tax payer has entered into an arrangement to the satisfaction of the Defendant. However, the Defendant acknowledges that in some cases brought before this Honorable Court, DPO has only been revoked for medical treatment urgently required by the Plaintiff.

7.5. That as to paragraph 6 and 7 he is not aware of the same therefore, he cannot admit nor deny.

7.6. That paragraph 8 is admitted.

7.7. That paragraph 9 is admitted to the extent that the meeting was duly held on the 19th of February 2013. The Defendant maintains that the Plaintiff's particulars of alleged missing invoices are for unsubstantiated expense invoices stated in their lodged VAT returns and also were not retained pursuant to Section 79 of the VAT Decree at the time of audit. The relevant law now being Section 34 of the TAD.

7.8. The paragraph 10 and 11 are admitted and the paragraph 12 is denied.

7.9. The Defendant stated that this Honorable Court disallows the orders sought in the Plaintiff's Summons.

[8] Consideration, Conclusion and Determination
8.1 The Plaintiff is a businessman engaged in a family business of Jewelry through Shivam Imports and Exports Limited.

8.2 The Plaintiff's Jewelry outlet in Nausori was audited by the Fraud and Evasion Audit Team of the Defendant in July 2004. The Defendant informed the Plaintiff by letter dated 15 July 2005, that for the period 1 January 2000 to 31 December 2004, inclusive the total tax liability was assessed at $3,464,965.98 including penalties in accordance with Section 76 of the VAT Decree 1999 (MKK2). The Defendant had annexed the schedule of discrepancy notices of Value Added Tax assessments and the Statements of Tax Account for Value Added Tax to MKK2. On perusal of the Vat input summary reports, I find it was reported that there are a number of invoices and missing, false invoices were tendered by the Plaintiff as such, the Defendant had disallowed the Vat Claims pursuant to Section 39 (5) of the VAT Decree.

8.3 The Plaintiff objected to the assessment in MKK2 which was replied by the letter dated 1 June 2006, and informed the Plaintiff that the Commissioner had partially allowed the objection and amended Tax Assessment Notice was issued pursuant to Section 50(4) of the Vat Decree 1991. It was also stated in the said letter, the Plaintiff may exercise the right of appeal under Section 50(5) of the VAT Decree within 2 months from the date of the said letter dated 1 June 2006 (MKK5).

8.4 The Plaintiff had filed Notice of Appeal in the Tax Tribunal on 24 July 2006 and the Defendant filed its Response to the Appeal (MKK6 and MKK7).

8.5 On 15 July 2005, Commissioner issued Departure Prohibition Order (2005 DPO) was revoked on 9 July 2008. Another DPO was issued on 22 March 2010 (MKK10), the Plaintiff stated. However, on perusal of MKK10, I agree with the Plaintiff that the (MKK10) DPO was issued on 11 March 2010 by the Notice of Motion filed by the Plaintiff pleaded to cancel the DPO issued on 22 March 2010. However, in paragraph 18 of the Plaintiff's affidavit, it was stated the correct date of MKK10 (DPO) as 11 March 2010. Accordingly, I conclude the date stated in the Notice as 22 March 2010 is a genuine mistake, and this court should act in a fair manner and disallow the submissions by the Defendant on this ground.

8.6 On 24 March 2006, a Garnishee Notice issued on the Plaintiff's account at ANZ Bank and it was revoked on 31 March 2006 and reissued on 7 April 2006.

8.7 After considering the objection which was raised on the assessment MKK2 on 1 June 2006, the Defendant partially allowed the Plaintiff's objection and reduced the tax liability and penalty from $3,464,965.98 to $3,223,120.94; as stated here in before.

8.8 The Plaintiff appealed against the said amended Notice of Assessment MKK5 which is pending before the Tax Tribunal.

8.9 The Plaintiff submitted that the Defendant by its letter dated 6 December 2010 had advised the Plaintiff that the DPO issued on 11 March 2010 would be revoked if the Plaintiff pays the sum of $600,000.00 and further monthly installments of $5,000.00 commencing from January 2011, (marked as "MKK12"). The said letter further states this decision was made at the meeting on the same day i.e. 6 December 2010 with the Plaintiff. It further states "this offer for revocation of the Departure Prohibition Orders under the above condition is valid for 30 days.

8.10 The Defendant's position was that it advised the Plaintiff that the DPO only can be removed if the Plaintiff settles the Tax Debt or makes arrangement to settle the Tax Debt subject to satisfaction of the Defendant, (paragraph 23 of the affidavit of the Defendant dated 21/6/2013), which I agree.

8.11 Now, I deal with DPO issued on 11 March 2010 pursuant to Section 31 of the Tax Administration Decree which states:

"Departure Prohibition Order

31-1 (a).......................

(b) the CEO believes on reasonable grounds that it is desirable to do so for the purposes of ensuring that the person does not depart from Fiji for a foreign country without –

(i) wholly discharging the tax liability; or

(ii) making arrangement satisfactory to the CEO for the tax liability to be wholly discharged".

DPO and Garnishee Orders are issued to enable the Defendant collect and recover the tax. It is abundantly clear a per Section 77A(5) which was repealed by Section 31 (8) of the Tax Administration Decree unless the tax debt is settled in full or tax payer provide security to the satisfaction of the Tax Debt, the Defendant shall not revoke the DPO. Section 31 (8) of the Tax Administration Decree states:

"31- (1) ..............................

(2) ..............................

(3) ..............................

(4) ..............................

(5) ..............................

(6) ..............................

(7) ..............................

(8) The CEO must revoke a departure prohibition order if –

(a) the taxpayer makes payment in full of the tax payable or that will become payable by the taxpayer;

(b) the taxpayer makes an arrangement satisfactory to the CEO for payment of the tax that is or will become payable by the taxpayer".

The Defendant also stated in MKK12 that DPO's issued on the partners would be facilitated if $600,000.00 is paid. Admittedly there was no payment of $600,000.00 within 30 days. Since the payment of $600,000.00 was not made the offer had come to stand still on 3rd January 2011. I refer to Section 31(5) of the Tax Administration Decree stated in paragraph 8.13 of this Judgment and state the Defendant must revoke a departure prohibition order by making the full payment of the tax liability or the tax payer must make an arrangement satisfactory to the Defendant for payment of the tax. The offer made by the Defendant by MKK12 is agreed upon by the Plaintiff and he himself defaulted as such the Defendants' decision to continue with the DPO is justified and the Defendant acted in pursuant to Section 31-1(b) of the Tax Administration Decree and the Plaintiff did not satisfy the requirements under Section 31(8) of the Tax Administration Decree.

8.12 The Plaintiff's main argument was that he didn't receive documents as promised by the Defendant in the letter marked MKK9 to challenge the assessment. However, I observe the annexures to document marked MKK2 gives the statement prepared by the Defendant the schedule of discrepancy, Notices of Value Added Tax Assessments and the Statement of Tax Accounts for Value Added Tax. On careful study, I find the large VAT refund claims are refused due to the reason the relevant invoices were not produced by the Plaintiff. Other VAT refund claims are refused since the Plaintiff tendered false invoices; and certain instances it was stated invoices were verified with third parties and it was informed those are false VAT refund claims.

It is obvious that the Plaintiff had not produced certain documents and tendered alleged false document. In such a situation, the onus lies with the Plaintiff to prove his claim. I further state what the Defendant had agreed is that they will make available a set of photocopies of the Documents which are in possession. It is a matter to be decided at the Tribunal and to make conclusions at the hearing. I am satisfied that there is no merit to consider MKK9 for revoking the Departure Prohibition Order.

8.13 The Plaintiff submitted several case authorities specifically referring to Justice Pathik in case of Commissioner of Inland Revenue vs. United Touring Fiji Ltd; Case No. [2000] 181: HAS 1998 (decided on 11 August 2000):

"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....."

8.14 The Plaintiff going by the said principle raised the issue, and stated by seizure of accounting source documents, the Plaintiff was precluded from raising a proper objection and as such discharge the Plaintiff's onus of proof. I conclude, this issue cannot be considered at this juncture until the Tax Tribunal makes its findings on the Appeal. By the letter dated 10 June 2008, the Defendant agreed to forward the documents available with them. When this matter was taken up on 10 September 2013 it was submitted to this court by Ms Lal R. and Ms Rayawa T. that both counsel spoke to Bhupendra Solanki, then Acting National Manager Legal Services and agreed to make available the documents to the Plaintiff. This court made a direction to handover the copies to the Plaintiff. On 12 September 2013, Ms Lal stated the documents are available with the Defendant subject to verification. When the matter was called on 10 December 2013, Ms M Volau who appeared for the Plaintiff stated the Plaintiff had retained new counsel Mr A Naco. This court cannot consider as to whether onus of proof has to be shifted to the Defendant since Ms Lal had agreed that documents are available subject to verification. There is no evidence before me as to whether the said documents requested by the Plaintiff were verified or not as such the Plaintiff's submissions fails. In any event as stated hereinbefore this issue should be decided in the appeal pending before the Tribunal.

In any event the evidence available before this court is part of MKK2, the report which indicates the VAT claims are refused due to:

(i) non availability of the invoices;

(ii) false invoices presented;

(iii) certain expenditure claims are refused.

The said issues should be contested at the appeal before the Tribunal and this court cannot use its discretion in favour of the Plaintiff unless the Plaintiff proves the Defendant acted malafide, or in breach of principles of Natural Justice by issuing DPO and Garnishee Notice. The Plaintiff fails.

8.15 The Plaintiff also alleged that payments were made under duress. There is no evidence before me to such effect. MKK11; MKK13 and MKK14 do not tantamount to duress. MKK11 is the DPO; MKK13 is an offer made to the Plaintiff and the Statement made therein is that the Plaintiff will take necessary steps under law. MKK14 is a letter acknowledging payment of $50,000.00 and indicating that to consider any reviews $300,000.00 to be paid. There is no merit in the Plaintiff's submission and he fails.

[9] I also state the issuance of a DPO is to ensure the collection of Tax Debt. It is a tool to be used to prevent evasion of tax payment. The Plaintiff's case was based on non receipt of certain documents seized by the Defendant which could be argued at the hearing of the appeal by the Tribunal. The Defendant's action is not unreasonable in the context that it had to ensure the collection of the revenue on behalf of the government finally to benefit the general public. The securities offered by the Plaintiff does not support by the actual values and not sufficient to cover the total tax liability.

[10] I agree with the statement made in the case of Snow vs. DCT (WA) (1987) 18ART 439 at page 551 by Hulley J. observed:

"........that the power to stay should be exercised with great caution and only under special circumstances".

The court could use its discretion when there was an abuse of office by the Defendant. I do not see any special circumstances or abuse of office by the Defendant on the issuance of DPO. The action to issue DPO and seizure of the Account by a Garnishee Notice is well within the powers conferred upon the Defendant, (Section 27 of the Tax Administration Decree).

[11] The submissions and the affidavits and documents filed by the Plaintiff and his Accountant, Narsey effectively canvassing the assessment made by the Defendant which has to be argued before the Tribunal. The said material will not assist him to justify revocation of the DPO and the Garnishee Notice.

[12] The Plaintiff also claims to refund the monies paid on the Notice of Assessment. There is no basis for his application. Once the appeal before the Tribunal is finalized he could claim refund if any. The appeal pending before the Tribunal do not warrant him to get a refund of the Taxes paid. The Defendant is authorized to collect taxes despite any application for review pending pursuant to Section 21 (3) of the Tax Administration Decree.

[13] Accordingly, I make the following Orders which are binding upon in Civil Action No. 122 of 2013 and 121 of 2013 as per preceding paragraph 3 of this Judgment:

(a) The Orders sought in Notices of Motion of 2 May 2013 filed on 3 May 2013 by the Plaintiff in this case and the Plaintiffs in Case Nos. 121/2013 and 122/2013 are refused thus Notices of Motion are dismissed;
(b) The Plaintiffs in this Case and Case No. 121/2013 and 122/2013 are Ordered to pay summarily assessed cost of $1,500.00 each to the Defendant.

Delivered at Suva this 26th Day of February 2015.

C. KOTIGALAGE
JUDGE