South Seas Tuna Corporation Ltd v Palaso [2017] PGNC 421; N7698 (23 November 2017)

N7698

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (Comm) 382 of 2016

BETWEEN:
SOUTH SEAS TUNA CORPORATION
LIMITED
Plaintiff

AND:
BETTY PALASO as
COMMISSIONER GENERAL, INTERNAL
REVENUE COMMISSION
First Defendant

AND:

INTERNAL REVENUE COMMISSION
OF PAPUA NEW GUINEA
Second Defendant

Waigani: Hartshorn J
2017: 23^rd November

APPLICATION for declaratory relief concerning the Goods and Services Tax Act 2003

Counsel:

Mr. M. Goodwin, for the Plaintiff
Ms. S. Sinen, for the First and Second Defendants

23^rd November, 2017

1. HARTSHORN J: This is a decision on a contested application that concerns journal entries made by the defendants, the Internal Revenue Commission and its Commissioner, on the Goods and Services Tax (GST) account of the plaintiff (South Seas Tuna).

2. South Seas Tuna claims that the defendants made three journal entries which constitute three different assessments of GST. As South Seas Tuna gave notice requiring the Commissioner to state a case in respect of the first assessment for the opinion of the National Court and commenced this proceeding, it has invoked the judicial procedures of the Goods and Services Tax Act 2003 (GST Act). It is submitted that the Commissioner lacks power to make the second and third assessments as they were made after the judicial procedures in the GST Act were invoked, contrary to the doctrine of functus officio and are therefore void. South Seas Tuna seeks declaratory orders to the effect that only the first assessment is justiciable and that the second and third assessments are functus officio and void.

3. The defendants submit that the first and second journal entries were merely that and do not constitute assessments. The third journal entry issued on 24^th June 2016 did constitute an assessment for tax pursuant to the GST Act. Further, the GST Act provides for the Commissioner to alter or add to an assessment from time to time.

Background

4. In July 2000 South Seas Tuna entered into a Project Agreement with the State and the East Sepik Provincial Government to develop a Tuna Processing Facility in Wewak. The Facility became operational in 2004. Issues have arisen concerning the GST that is payable by South Seas Tuna.

5. South Seas Tuna commenced this proceeding by originating summons seeking declaratory relief to the effect that:

a) The supply of its tuna processing services to FCF Fishery Company Ltd (FCF) for tuna owned by FCF and brought to South Sea Tuna’s Wewak facility for processing under the control of Customs and then re-exported, is chargeable with GST at the rate of zero per cent on the invoice price of the processing services, and

b) The Inland Revenue Commission owes K4,709,330.98 as at 31^st May 2016 to South Seas Tuna which is due and payable.

This application

6. South Seas Tuna applies pursuant to Order 10 Rules 21 and 23 National Court Rules. No objection was made by the defendants as to South Seas Tuna’s reliance upon these Rules. I am satisfied that South Seas Tuna is able to rely upon these Rules for the relief that it seeks.

7. As to whether some or all of the subject journal entries to South Seas Tuna’s GST account are assessments as referred to in amongst others, s. 67 and s.74 GST Act or decisions as referred to in amongst others s. 73 GST Act, as a consequence of s. 73(7) GST Act it is not necessary to make a determination. This is because s. 73(7) provides in essence that an objection to a decision may be referred to the National Court by way of case stated, in the same way that an objection to an assessment may be referred.

8. In regard to whether the doctrine of functus officio operates in this instance to render the second and third journal entries void because South Seas Tuna has invoked the judicial procedures of the GST Act before the second and third journal entries were made, on behalf of South Seas Tuna, it was submitted that amongst others, that from a perusal of Australian cases on the issue, that s. 32 Interpretation Act (which is almost the same as s. 23(1) Acts Interpretation Act in Australia and s. 12(1) Interpretation Act 1978 in England), raises a mere presumption which is generally rebuttable to prevent the exercise of a power of reconsideration of a decision which is inconsistent with the requirement of finality in decisions, and is particularly dependent on the construction of the statute governing the issue in dispute. Further, it was submitted that amongst others, an analysis of relevant English decisions established certain principles, one of which is, that it is necessary to examine the construction of any statutory provisions to determine what powers and rights are afforded or restricted.

9. In regard to the GST Act, the submission was made that while s. 67(3) GST Act provides a power to the Commissioner to alter or add to an assessment to ensure its correctness, this should be subject to the issue falling within one of the exceptions to the rule that an administrative decision cannot be revisited. Also, the wording of s. 67(3) is restrictive as it refers to the “correctness” of an assessment, and does not provide an extensive right to revisit a decision made.

10. Section 67(3) is as follows:

“(3) Subject to Section 72, the Commissioner may from time to time and at any time make all such alterations in or additions to an assessment made under this section as the Commissioner thinks necessary to ensure the correctness thereof, notwithstanding that tax already assessed may have been paid.”

11. It is to be noted that s. 67(3) provides that the Commissioner may, “.. from time to time and at any time..” make alterations and additions.

12. Another section in the GST Act provides for the Commissioner to make other assessments and to amend assessments. Section 83 GST Act is as follows:

“The determination of an objection under this Part shall relate solely to the assessment or decision (as defined in Section 73(1)) objected to, and shall not affect the right of the Commissioner to make any other assessment or such decision in respect of the objector, or to amend the assessment or such decision objected to in any manner rendered necessary by that other assessment or such decision.”

13. To my mind, as a determination of an objection of an assessment or decision does not affect the rights of the Commissioner to make another assessment or decision in respect of the objector, or to amend the assessment or decision objected to, and “The determination of an objection under this Part..” includes amongst others, objections referred in the first instance to the National Court for determination by way of case stated, it is intended that the power of the Commissioner in regard to making other assessments or amendments to assessments or decisions is not to be fettered, by for instance, an objector invoking the judicial procedures of the GST Act.

14. This is supported by s. 67(3) GST Act providing that the Commissioner may from time to time and at any time make alterations or additions to an assessment.

15. Consequently, if the doctrine of functus officio as to administrative decisions as submitted on behalf of South Seas Tuna, does apply in this jurisdiction, and it has not been necessary to determine that question in this instance, then in my view from a perusal of the provisions of the GST Act and in particular the wording of s. 67(3) and s.83 GST Act, they do not permit the doctrine to apply in relation to the GST Act. The relief sought by South Seas Tuna should be refused. Given this it is not necessary to consider the other submissions of counsel.

Orders

16. The Court orders that:

a) All of the relief sought in the amended notice of motion of the plaintiff filed 20^th July 2016 is refused;

b) The plaintiff shall pay the costs of the defendants’ of and incidental to the said amended notice of motion;

c) Time is abridged.
____________________________________________________________
O’Briens Lawyers: Lawyers for the Plaintiff
Internal Revenue Commission: Lawyers for the First and Second Defendants