Commissioner, General Internal Revenue Commission v Waliwei Ltd [2001] PGDC 12; DC155 (30 November 2001)

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VALUE ADDED TAX – Failure by the defendant as a registered VAT payer to lodge returns for the taxable periods on or before the 21st of the following month after the taxable period.

JURISDICTION - Whether the District Court has jurisdiction to hear the cases "ex parte" S. 125 of the District Courts Act – Chapter 40. Also S. 37 (5) of the Constitution.

CASES CITED
Supreme Court Reference No. 1 of 1976 and Peter Rakatani South
Pacific Brewery Ltd [1976] PNGLR 537.

ARUA: The defendant company stands charged that it did fail to furnish VAT returns thereby contravening to S. 62 of the Value Added Tax Act. The actual offence was deemed to have been committed on nineteen (19) specific periods for which nineteen charges were laid by way of summons upon information. Instead of giving nineteen separate judgments, I have decided to incorporate them all in this judgment as they all involve the same parties.

On all the occasions that the matters were mentioned or even set for ex parte hearing. The defendant did not show up or was not represented although it was duly served with the summons and also notified. I am satisfied that the defendant was duly served in accordance with S. 431 of the Companies Act, 1997. In doing so, I accept the affidavit of service filed by Louis Oa dated 17/8/01 and the acknowledgment of service signed by CJ Murrary marked as annexure "B" who is the Tax Agent for the defendant. Having found that the defendant was duly served with all the nineteen charges, I am now left with the issue of jurisdiction. Do I have the jurisdiction to proceed and hear the charges ex parte?

To find the answer to the jurisdictional issue, I refer to S.125 of the District Courts Act, Chapter 40. While I do not think it is necessary for me to restate S. 125 here word for word. I’m satisfied that it gives the mandate for me to hear and determine the matters before me and make ex parte orders. However I am also mindful of the defendant’s constitutional right under S. 37 (5) to a fair trial. S. 125 of the District Courts Act is therefore subject to S. 37 (5) of the Constitution. S. 37 (5) of the Constitution states:

".............but provision may be made by law for a charge that a person has committed an offence the maximum penalty for which does not include imprisonment, (except in default of payment of a fine), to be heard summarily in his absence if it is established that he has been duly served with a summons in respect of the alleged offence". (underlining mine).

My understanding of S. 37 (5) is that there has been a provision made by a law for an offence that doesn’t include imprisonment as a penalty to be heard summarily in the absence of the defendant if it is established that the defendant has been duly served with the summons in respect of the alleged offence. This is my view means that if the value Added Tax intended for a charge brought under its provisions to be heard ex parte or in the absence of a defendant then it should provide for it in the Act explicitly. My perusal of the Value Added Tax Act however failed to identify any such provision which meant that I had to turn to other sources to satisfy myself as to whether I could go ahead and determine these cases in the absence of the defendant or not.

In the absence of the Value Added Tax Act mentioning any such provisions, I think one can get the lead or direction from S. 93 of the VAT Act which provides for the proceedings to be taken summarily before a District Court. Therefore although the VAT Act is silent on the provision mentioned under S. 37(5) of the Constitution one can invoke the provisions mentioned under the District Courts Act to apply in the VAT cases as S. 93 of The VAT Act mentions the forum for all proceedings brought under it to be the District Court. On this basis, I am satisfied that S. 125 of the District Courts Act should apply in the cases before this court. I am also satisfied that the District Courts Act is a law that makes provisions for such cases before me, the maximum penalty for which does not include imprisonment to be heard summarily in the absence of the defendant thus complying with the requirements of S. 37 (5) of the constitution. And S. 125 of the District Courts Act in particular gives effect to the requirements of S. 37(5) of the constitution.

The issue of jurisdiction was also settled in the case of Supreme Court Reference No. 1 of 1976 and Peter Rakatani v. South Pacific Brewery Limited [1976] PNGLR 537.

Having satisfied myself with the question myself with the question of jurisdiction, I will now proceed with the case ex parte. The defendant is a registered VAT payer and had been allocated the VAT Registration No. VT. 3889. According to the facts submitted it failed to furnish VAT returns for the following taxable periods:

1/07/99 to 31/07/99	1/4/2000 to 30/4/2000
1/08/99 to 31/08/99	1/5/2000 to 31/5/2000
1/9/99 to 30/9/99	1/6/2000 to 30/6/2000
1/10/99 to 31/10/99	1/7/2000 to 31/7/2000
1/11/99 to 30/11/99	1/8/2000 to 31/8/2000
1/12/99 to 31/12/99	1/9/2000 to 30/9/2000
1/01/2000 to 31/1/2000	1/10/2000 to 31/10/2000
1/02/2000 to 28/2/2000	1/11/2000 to 30/11/2000
1/3/2000 to 31/3/2000	1/12/2000 to 31/12/2000
	1/01/2001 to 31/01/2001

It seems that the defendant has failed to lodge the relevant returns to date. While the defendant may have its reasons for the non lodgment of the returns its failure to do so was in contravening to S. 62 of the VAT Act. S. 62 (1) in particular makes it a duty of the registered VAT Payer as in the case of the defendant to lodge returns for the taxable periods on or before the 21st of the following month after the taxable period. And S. 91(1) (c) of the same Act provides that failure to comply with S.562 (1) is an offence.

I have considered the affidavit of Louis Oa date 17/08/2001 together with the statement of facts filed on 6/09/01 in relation to the specific taxable periods mentioned. I accept the affidavit and the facts to be that the defendant failed to lodge any tax returns for the periods which are the subject of the proceedings now before this Court. For the second and third elements of the offence it is clear that because the defendant failed to lodge any returns for the periods mentioned initially it automatically failed to comply with the last two elements as they flow on from the fulfilment of the first element.

Based on the affidavit of Louis Oa, the facts filed in support of the information the defendants failure to respond to various notices of the informant and its failure to make any representation in these proceedings. I am satisfied that the defendant did fail to comply with

S. 62 (1) of the VAT Act thereby committing an offence under S. 91(1)(c) of the same Act. Accordingly, I find the defendant guilty for failing to lodge VAT returns for the different periods mentioned in the specific information’s and registered as WDC NOS. 788 to 806 of 2001 respectively.

The penalty provision for committing an offence prescribed by S. 91 (1) of the Value Added Tax is spelt out under S. 91 (3). I do not think it is necessary to restate the whole of S. 91(3) here. However for the purposes of the proceedings before me I am of the view that for the first and second occasions for the taxable periods covering 1/07/99 to

31/07/99 and 1/8/99 to 31/08/99 particularly registered as case NOS. 788 and 789 OF 2001 the penalty provisions of S. 91 (3) (a) and (b) should apply. That is:

As for all other occasions covered by and registered as case NOS. 790 to 806 of 2001 I think the provision under S. 91 (3) (c) should apply ie: for a fine not exceeding K1000.00 for every other occasion other than the occasions referred to in paragraphs (a) and (b).

While I have the discretion to impose fine of up to K500.00 and K750.00 for the first two occasions and K1000.00 for all other occasions I think that it would be appropriate in the circumstances of all the matters before me (case Nos.788 –806) to impose a fixed or same amount of fine for all nineteen cases. After all the penalty provisions mentioned in S.91 (3) only puts limit on the maximum amount of fine that may be imposed. It does not set any minimum amount that a court should impose. Based on these considerations I would impose a fine of K100.00 to be payable by the defendant for each of the nineteen cases registered as case Nos. 788 to 806 of 2001 which accumulates to a total fine of K1,900.00 to be payable within a month as of today. I further order that the defendant lodge the relevant returns for the periods mentioned within a month as of today. I make no order as to costs.

Papua New Guinea District Court

Commissioner, General Internal Revenue Commission v Waliwei Ltd [2001] PGDC 12; DC155 (30 November 2001)