A Pharmacy Company v Fiji Revenue & Customs Authority [2013] FJTT 21; Application 02.2012 (2 December 2013)

IN THE STATUTORY TRIBUNAL, FIJI ISLANDS
SITTING AS THE TAX TRIBUNAL

Application No 2 of 2012

BETWEEN:

A PHARMACY COMPANY
Applicant

AND:

FIJI REVENUE & CUSTOMS AUTHORITY
Respondent

Counsel: Mr V Kapadia, Sherani & Co Solicitors, for the Applicant

Ms F Gavidi, FRCA Legal Unit, for the Respondent

Date of Application:Wednesday 27 November 2013
Date of Decision: Monday 2 December 2013

DECISION

TAX ADMINISTRATION DECREE 2009- Section 81(2)(b) Consent to Jurisdiction; Section 88(1) – Application to Transfer proceedings to Tax Court; Withdrawal of Consent.

Background

1. The substantive matter before the Tribunal relates to a dispute regarding Amending Tax Assessments issued by the Respondent to the Taxpayer in the taxable periods 2006 to 2012. At issue was the value added taxes and penalties imposed within those amended assessments, to the total value of $976,470.83.
   
2. That matter was listed for hearing before this Tribunal today.
   
3. By letter dated 26 November 2013, Counsel have jointly written to the Tribunal requesting that the scheduled hearing date be vacated and that the file be returned to the High Court Registry for further directions by the Tax Court. The correspondence reads inter alia,
   

"The Application is made under Section 81(2)(a) and (b) of the Tax Administration Decree 2009 upon the following grounds:-

(i) the amount in dispute is substantial and well in excess of $50,000.

(ii) The application involves a point of law of general public importance, in that, it involves interpretation and application of criteria 1,2 and 3 of the Second Schedule to the VAT Decree.

(iii) The transfer of proceedings to the High Court will save both parties costs of likely appeal from the decision of the Tribunal.

(iv) If necessary the parties do withhold, or withdraw, their consent under Section 81(2)(a) and (b) of the Tax Administration Decree to facilitate the transfer of the proceedings to the Tax Court.

The parties apologize to the Tribunal for the lateness of this application and sincerely hope that the Tribunal will not be unduly inconvenienced."

4. Upon receipt of this joint application on 27 November 2013, the Tribunal wrote to the parties requesting that they provide further submissions as to why the application was made at this late stage.[1]
   
5. The further submissions of the Taxpayer[2] state:
   

(i) The Applicant had earlier advised the Tribunal that it intended to brief counsel in the matter who recently advised the Applicant that it would be more appropriate to have this matter determined by the High Court of Fiji, thereby saving duplication of the hearing on the same points and costs to the parties.

(ii) Counsel for the Respondent who has carriage of this matter was on maternity leave and returned to work only last week and the question of transfer to the Tax Court was discussed with her on Tuesday 26 November 2013. Following agreement, a joint application was made yesterday.

(iii) As the parties have stated in the joint application the reason for making the application was the saving of considerable costs to the parties of likely appeal against the decision of the Tribunal to the Tax Court.

(iv) The application involves a point of law of general public importance in that it involves interpretation and application of criteria 1,2 and 3 of the second schedule to the VAT decree which provision has not been dealt with by the Courts of Fiji so far.

(v) The application for review was filed on the 19 November 2012, At that time no appointment to the Tax Court had been made,

(vi) The dispute relates to VAT and penalty of $976,470.83.

(vii) For the foregoing reasons the application for transfer of the matter and the application of the hearing date could not be made any earlier.

6. In response to the Tribunal's request, the Respondent submitted:-[3]
   
   • On the 26th of November 2013, the Applicant discussed with the Respondent the issue of transfer to the Tax Court and following this discussion, the Respondent agreed and consented that the matter be transferred to the Tax Court as it was a prerogative of the Applicant given that this was their appeal. [4]
     
   • The Applicant has given one of their reasons for the transfer was to save duplication of hearing on the same points and costs and the Respondent agrees to the reasons stated and therefore does not object to this application of transfer.
     
7. I will deal with the matters in the order that they have been submitted to the Tribunal.
   

Section 81 of the Tax Administration Decree 2009

8. The joint application is made purportedly under Section 81(2)(a) and (b) of the Decree. So that all parties are quite clear, Section 81 of the Decree provides:
   

81. — (1) The Tribunal has jurisdiction —

(a) to revirevi reviewable decision under this Decree; and

(b) exerciseothy other ion or juri jurisdiction conferred to the Tribunal under this Decree y other written law.

(2) The Tribunal has power —

(a) to adjue onte on matters within its jurisdiction relating to disputes up to $50,00d

(b) t160;to determine claims where the amount in dispute exceeds $50,000 if both parties consent to the Tribunaurisdictionction.

(c) to dete anne any decision relating to the registration or cancellation of registration Tax Agent.

9. Firstly, an application for transfer of proceedings to the Tax Court is made under Section 88(1) of the Decree, not Section 81. Specifically Section 88(1) reads:
   

A party to the proceedings may apply to the Tribunal to have the proceedings transferred to the Tax Court for the hearing and determination of the matter.

10. That is the appropriate course to follow if it is the case that a Taxpayer and the Respondent want a matter transferred to the Tax Court. The Tribunal notes the joint position of the parties that:
    

if necessary the parties do withhold, or withdraw their consent under Section 81(2)(a) and (b) of the Tax Administration Decree to facilitate the transfer of proceedings to the Tax Court[5].

11. That is an extraordinary joint position to adopt four days out from the proposed hearing of a matter. I say this for several reasons. Firstly, let us consider the chronology of events that had taken place prior to that time. This is summarised as follows:-
    

Date	Issue
3 December 2012	Matter initially called on for mention
10 December 2012	Respondent issued with specific directions in relation to provision of Section 83 documents.
4 February 2013	Respondent required to provide additional information to Applicant at request of Tribunal.
11 February 2013	Further directions issued to Respondent for provision of better information.
8 April 2013	Report back.
23 April 2013	Report back and clarification on Agreed Statement of Facts.
3-4 June 2013	Report back and request by Applicant for Consent Orders on repayment plan to be endorsed by Tribunal. Application refused.
10 June 2013	Matter set down for hearing on 25 October 2013
4 July 2013	Joint request by parties under the signature of Counsel for the Taxpayer requesting vacating date of 25 October 2013 and that a hearing date be fixed in the session between 2 December 2013 and 14 December 2013.
15 July 2013	Tribunal received written request from Counsel for Taxpayer that overseas Counsel available "any date from the 2nd December to the 14th December 2013"
13 September 2013	Report back and Applicant advised overseas Counsel unable to appear for a date of hearing, until December 2013.
6 November 2013	Tribunal advised parties ready to proceed and agreed to date of hearing of 2 December 2013. Directions issued for submission outlines to be lodged by 15 November 2013.
15 November 2013	Both parties filed and served Submission Outlines.

12. One would have assumed that the parties joint consent to the jurisdiction of this Tribunal came about some time on or around 10 December 2012, which was that date that specific directions were issued pertaining to the requirement of the Respondent to provide Section 83 documents.[6] It certainly was apparent on 3 June 2013, when the Applicant had sought to make a request on behalf of both parties, to have some interim consent orders issued in relation to payment arrangements that had been negotiated independently of the Tribunal process. And it appeared to be well in place on 6 November 2013, when the parties advised the Tribunal that they were ready to proceeed.
    

Withdrawal of Consent to Jurisdiction

13. The language of the joint approach of the parties is quite intriguing, where it states:
    

ïf necessary (my emphasis) the parties do withhold or withdraw their consent".

14. The Decree makes no provision for the withdrawal of consent. Ordinarily one would assume that at the outset of a consent jurisdiction proceeding, that either or both parties would make an election as to whether or not they would seek to have the matter transferred to the Tax Court in accordance with Section 88 of the Decree.
    
15. In some common law jurisdictions, it may be the case that withdrawal of consent may come about, with the leave of the court or Tribunal.[7] In criminal matters, withdrawal of the consent may be available, such as consent to deal with a matter by way of summary proceedings, only where a court considers that it is in the interests of justice to do so.[8] On other occasions, legislation may specifically prescribe that once consent is given, that it cannot be withdrawn.[9] In the case before me when the submissions of the parties have been filed, there is no absence of consent. Courts and Tribunals cannot function if mid course, parties decided to 'pack up stumps' and seek to have a matter determined elsewhere. There are significant dangers in allowing this to take place, some of which will be canvassed shortly.
    
16. It is quite concerning though that the Respondent submits that:
    

the Respondent agreed and consented that the matter be transferred to the Tax Court as it was a prerogative of the Applicant given that this was their appeal.

17. I totally disagree with Counsel's submissions. Of course, the Applicant would be entitled to consent or not consent to the jurisdiction of the Tribunal. That is its prerogative. There is though no absolute prerogative for the Applicant and Respondent to withdraw their consent, as a matter of right, once that consent has been given. As a first impression, that time has long passed. It was available at the first mention date. It is understandable even if this took place some time shortly following the establishment of the Tax Court on 26 February 2013, though I am not entirely convinced that the Tax Division of the High Court was not empowered to otherwise fulfil that apparent statutory vacuum, as an interim measure.[10] It was possibly also available up and until the lodging of submissions.[11] But I dare say, in the absence of some 'interest of justice' that has not been articulated by the parties, I find such a proposition ill conceived and in any event, unavailable.[12]
    

Reasons for Seeking Transfer of Proceedings

Views of Overseas Counsel

18. The first reason for requesting the application to transfer proceedings, as set out within the Applicant's submissions is
    

The Applicant had earlier advised the Tribunal that it intended to brief counsel in the matter who recently advised the Applicant that it would be more appropriate to have this matter determined by the High Court of Fiji, thereby saving duplication of the hearing on the same points and costs to the parties.

19. This submission borders on the offensive. As the chronology of events clearly shows, Counsel had flagged with the Tribunal at least from 4 July 2013 that overseas Counsel was to be involved and that this person would be available in the current sittings. In fact the dates that were allocated to hear this matter, were specifically requested by Mr Kapadia to accommodate overseas counsel attending. To spell it out, Counsel had advised the Tribunal that this date would be suitable to his overseas Counsel. To suggest now, that this issue of jurisdiction has only now surfaced to the minds of the lawyers, four days before Trial seems absurd and a reflection on the lawyers, not the law.
    
20. To claim now that consent at this stage should be withdrawn[13] so as to save duplication of the hearing on the same points and costs to the parties, shows complete disregard to the structure and purpose of the Decree and the inherent benefit that it assumes as establishing the Tribunal as a review body in the first instance.[14]
    

Absence of Counsel for the Respondent

21. The next reason that has been given by the Taxpayer for requesting this transfer, relates to the absence of Ms Gavidi while she was on maternity leave. It states:
    

Counsel for the Respondent who has carriage of this matter was on maternity leave and returned to work only last week and the question of transfer to the Tax Court was discussed with her on Tuesday 26 November 2013. Following agreement, a joint application was made yesterday.

22. This too is an astonishing submission and one that I am surprised has the support of the Respondent. The fact of the matter is that the Respondent has been well represented by Counsel since the inception of this matter. It is a matter of record, that the Tribunal was earlier disinclined to defer the hearing of the matter until such time as Ms Gavidi returned from maternity leave. All Counsel who were present during Directions will recall that the application to defer the hearing date, solely to accommodate the maternity leave arrangements of Counsel for the Respondent, with no guarantee that she would in fact return to work, was something that was not seen to be conducive to the effective listing of matters. A deferment on that basis was refused and the Respondent was advised that it would need to make other arrangements, particularly given the number of FRCA lawyers who come before the Tribunal.[15]
    
23. Keep in mind the date that was agreed to by the Respondent, was not imposed by the Tribunal but negotiated with the parties at their request. Mr Ravono who it appears had the carriage of this matter up and until last week, is a highly competent lawyer and one who the Tribunal at least, would have thought well capable of dealing with the Applicant's request. If Counsel are genuinely putting this up as a legitimate reason for the delay in making the request at this late stage; that is, that the Applicant's lawyer couldn't otherwise negotiate such a request with Mr Ravono, but rather have to wait for Ms Gavidi to return to work, then such a reason is regarded as a poor reflection on all concerned.
    

Savings to the Parties

24. The next issue raised by the Taxpayer is
    

the reason for making the application was the saving of considerable costs to the parties of likely appeal against the decision of the Tribunal to the Tax Court.

25. I accept in some respects this possibly could be the case. Though there would appear to be an inherent assumption within the proposition, that the matter once determined would be the subject of appeal. As a rule that may not always be the case.[16]
    

Second Schedule of the VAT Decree 1991

26. A further reason advanced by the Taxpayer is:
    

The application involves a point of law of general public importance in that it involves interpretation and application of criteria 1,2 and 3 of the second schedule to the VAT decree which provision has not been dealt with by the Courts of Fiji so far.

27. Again, the Tribunal is a little perplexed about this submission. Counsel for the Applicant's own law firm was recently involved in a matter before this Tribunal where some aspects of the application of the Second Schedule to the Value Added Tax Decree 1991, were considered.[17] It is perhaps also worth pointing out, if only from a historical point of view, that the decision in Company R, was issued on the same day as the Taxpayer lodged its preliminary submissions in this matter .
    
28. There is nothing contained within the Second Schedule of the VAT Decree that is any more or less important from a general public point of view. Every provision within the Decree is important.
    
29. If it was the case that the parties were in fact wanting the Tribunal to transfer the proceedings having regard to Section 88 (2)(a) and (b) of the Act,[18] then the test to be applied is as follows. There either needs to be an -
    

(a) an important question of law is likely to arise; or

(b)&#the case is of such a nature and of such urch urgency that it is in the public interest that it be transferred to the Tax Court.

30. There is nothing in the submissions before the Tribunal to suggest that there is an important question of law likely to arise, nor is the case of such a nature and of such urgency that it is in the public interest that it be transferred to the Tax Court.
    

Absence of a Tax Court

31. The next reason advanced by the Taxpayer for now seeking that the matter be transferred or for wishing to withdraw its consent to the Tribunal's jurisdiction, is:
    

The application for review was filed on the 19 November 2012, At that time no appointment to the Tax Court had been made,

32. The Honourable Justice Kotigalage was appointed to the Tax Court on 26 February 2013. The application to transfer comes nine months after the Court was established. Had the court been established even within the last two months, then some semblance of respect could be given to the argument that is advanced. Both parties have had an extensive period of time, in which they could have brought an application under Section 88 of the Decree. There is simply no logic, nor substance to the submissions in this regard.
    

Monetary Amount in Dispute

33. Finally, the submissions of the Taxpayer are,
    

The dispute relates to VAT and penalty of $976,470.83.

34. Of course this is accepted and it is quite clear that the jurisdiction of the Tribunal in relation to Section 82 (2) is very straight forward on this point.
    

The Tribunal has power —

(a) to adjue onte on matters within its jurisdiction relating to dispup to 00; and

(b) #160;to denermine claims where the amount in dispute exceeds $50,000 if both parties conse the Tribunal's Jurisdictioiction.

Conclusions

35. Based on the above analysis of the submissions of the parties, the joint application is dismissed.
    
36. The parties cannot withdraw their consent to a matter at this late stage. Not after submissions have been filed and the hearing was ready to proceed. In the absence of any other statutory direction, the Tribunal is unwilling to give the parties leave to withdraw their consent. Contrary to the views of Ms Gavidi, that is not an open ended discretion available to the Applicant, on the basis that it initiated the review application in the first instance. At the very least, it would have to be granted, subject to the leave of the Tribunal.
    
37. Counsel may do well to reacquaint themselves with the long title of the Decree that includes "to ensure the efficient collection of taxes". A system of regulation that is left to the whims of the parties to pick and choose at what point, they will opt out of the legal processes which they otherwise appeared to have agitated and embraced, would be a highly inefficient and dysfunctional one. The underpinning regulatory framework is predicated on clear mechanisms for the effective and orderly resolution of tax disputes. The conduct of the parties on this occasion, shows no regard to that framework whatsoever.
    
38. Despite the fact that Counsel for both parties appear to have cited the wrong sections of the Decree in which to make a transfer application, the Tribunal has treated the application as one that is two-pronged in approach. It either attempts to withdraw consent to the jurisdiction or seeks to apply to have the matter transferred. The parties have not met the threshold requirements required of Section 88(2) of the Decree. There has been no important question of law identified that is likely to arise, nor is the case of such a nature and of such urgency that it is in the public interest that it be transferred. Not that the application that has been made is clear, reasoned or apparently well supported by the law. It fails on all of those fronts.
    
39. In accordance with Section 88(2) of the Tax Administration Decree 2009, I dismiss the application to transfer the matter to the Tax Court. I also find that there is no entitlement either at statute or common law, to allow for the withdrawal of consent based on these facts and circumstances.
    
40. Had there have been a capacity to impose an order against both parties, for the court costs thrown away as a result of the conduct of Counsel, the Tribunal would have felt encouraged to make such orders. The matter will be relisted for hearing and the parties notified accordingly.
    

Decision

The joint application of the parties is dismissed.

Mr Andrew J See
Resident Magistrate

2/12/2013

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^[1] It was obviously also an opportunity for the parties to expand and make submissions on this application proper.

^[2] See Applicant’s Submissions to the Tribunal dated 28 November 2013.

^[3] See Respondent’s Submission to the Tribunal on Joint Application for Transfer to Tax Court dated 28 November 2013.

^[4] Given the Respondent was specifically requested to make submissions as to why the lateness of the application, I find the four paragraphs provided by Counsel, highly inadequate.

^[5] See Ground 4 of correspondence jointly signed by the parties dated 26 November 2013.

^[6] The Section 83 Documents are so referred as it is that section within the Tax Administration Decree 2009 that initially imposes the requirement on the Respondent to ensure that the Taxpayer has a full understanding of the reasons underpinning any Objection or Tax decision.

^[7] See for example the withdrawal of consent to civil trial jurisdiction within the District Court of Kansas. (Refer Rule 72.1.3).

^[8] See Clayton v Hall & Anor [2008] VSC 172 (23 May 2008).

^[9] See for example, Queensland Building Services Authority Act 1991 and refer Atcheson, P & N v Scacheri, G.R and Skehan G and Geoff Skehan Constructions Pty Ltd [2006] QCCTB 152 (13 September 2006).

^[10] It certainly was capable of entertaining appeals from decisions of this tribunal under the Income Tax Act (Cap 201) that appear to have been made under.

[11] To that end, such an application is distinguishable from Namosi Joint Venture v Fiji Revenue and Customs Authority [2013] FJTT 11

^[12] It would seem unavailable at statute and common law.

^[13] Keep in mind that is the basis of the application before the Tribunal.

^[14] Again to reinforce the point, that is not to say that the parties have no right to have the matter determined by the Tax Court. But the withdrawal of consent must be only given where it can be justified within the ordinary realms of court practice and procedure and having regard to the unique conduct of the parties leading up to that point.

^[15] Not that the Tribunal has a right to interfere or make undue comments in relation to the operations of the FRCA Legal Unit. Though as a matter of court administration, some view needs to be taken as to whether a matter should be stayed while a government lawyer is on maternity leave, particularly when like many forms of extended leave, there may not be any certainty that a worker does in fact return to work.

^[16] For example, it may be on occasion that a Tribunal Member could make a determination that was well accepted by both parties as being an accurate and well reflected determination of the dispute having regard to the law.

^[17] See Company R v Fiji Revenue & Customs Authority [2013]FJTT 19.

^[18] Which it is entirely unclear from their submissions and presentation of legal arguments.