IN THE HIGH COURT OF SOLOMON ISLANDS
(APANIAI, J)

Criminal Jurisdiction

REGINA -v- MATRINA KOATA

Date of Hearing: 18th May 2012.
Date of Judgment: 10th July 2012.

Mr. Aulanga for the Crown.
Mr. Pitakaka and Mr. Rose for the accused.

SENTENCE

1. This is a case which has been referred to this court for sentencing. The accused had pleaded guilty in the Central Magistrates Court to two offences under the Customs & Excise Act (Cap. 121) ("Customs Act"), namely, false declaration contrary to section 212(a) and fraudulent evasion of customs duty on imported goods contrary to section 213(e). The offences were committed on 26th October 2009.

2. The facts are not disputed. They are as follows:-

[1] The accused trades under the business name of Ausmart Company. She is the sole owner of that business and carries on business in Honiara.

[2] On 26th October 2009, the accused submitted to the Customs Department a customs form (C15 form - Import Entry for Home Consumption) ("Form C15") in respect of 77 packages of mixed goods which, in the form, was said to be worth $57,204.00. The invoice supplied along with the Form C15 showed that the importer was Ausmart and that the supplier was an Australian company called South Pacific Ocean International Trading. Based on those documents, import duty was calculated in respect of the goods at $5,720.40 and goods tax was calculated at $12,270.28. Both amounts were duly paid by Ausmart that same day.

[3] However, on inspection of the goods by the Customs Department, it was found that the supplier was in fact Henry Cummines and that the true value of the goods was $101,045.00.

[4] Armed with this information, the Customs officials confronted the accused who admitted that she had lied and that the supplier was Henry Cummines and not South Pacific Ocean International Trading. She also admitted that South Pacific Ocean International Trading was a fictitious name and that there was no such company in existence. Furthermore, she admitted that the invoice submitted to Customs Department was a false document created on her advice with the purpose of deceiving the Customs of the correct amount of duties payable on the goods. Finally, she admitted that the real value of the goods was not $57,204.00 and that the true value was $101,045.00.

3. The accused was subsequently charged in the Central Magistrates Court with false declaration contrary to section 212(a) and fraudulent evasion of customs duty on imported goods contrary to section 213(e) of the Customs Act.

4. Upon arraignment at the Central Magistrates Court, the accused pleaded guilty to both charges. However, the Magistrate had thought it proper to send the case to this court for sentencing on the basis that the Comptroller had elected to impose the treble value penalty under section 213 of the Customs Act instead of the $2,000.00 fine penalty as also provided for under that section.

5. The sole question in this case, therefore, is what should be the appropriate sentence to impose on the accused for these offences.

6. The maximum penalty for an offence under section 212(a) is now $10,000.00 fine. In regards to an offence under section 213(e), the maximum penalty is either the treble value of the goods in relation to which the offence has been committed ("treble value penalty") or $2,000.00 penalty, whichever the Comptroller deems appropriate.

7. As far as the penalties under section 213 are concerned, the Comptroller has the discretion to impose either the treble value penalty or the $2,000.00 penalty. It is one or the other but not both. The courts will not, however, lightly interfere with the exercise of that discretion. In this case, it is common ground that the Comptroller has elected to impose the treble value penalty.

8. There is no question that the treble value penalty and the $2,000.00 penalty are the maximum penalties for an offence under section 213. The treble value of the 77 packages of goods is $303,135.00. It follows therefore that any penalty to be imposed upon the accused for the offence under section 213 must not exceed those maximum penalties.

9. Two legal issues have arisen in the course of counsels' submissions and I intend to deal with these issues first before turning the question of the appropriate sentence in this case.

10. The first issue is whether a custodial sentence can be imposed under sections 212 and 213 of the Customs Act. Counsel for the accused argues that those sections only provide for penalties and forfeiture and that imprisonment is not a form of punishment available under those two provisions. As such, they submit that the accused can only be sentenced to a penalty but not imprisonment.

11. I agree that sections 212 and 213 only provide for the payment of penalties and for the confiscation of the goods which relate to the offence. However, section 253 of the Customs Act makes it clear that a custodial sentence may be imposed in default of the payment of any penalty imposed under the Act. Under section 253, the court has the jurisdiction to impose a custodial sentence on a person on whom a penalty has been imposed if the person fails to pay the penalty. Such sentence must not exceed 6 months (where the penalty does not exceed $200.00) or 12 months (where the penalty exceeds $200.00). It follows, therefore, in my view that when imposing a penalty under sections 212 or 213 of the Customs Act, the court has jurisdiction under section 253 to also impose a term of imprisonment in default of the payment of such penalty.

12. The second issue relates to the question of forfeiture under section 213. The question that arises is whether the Comptroller's power of forfeiture is discretionary. In my view, the Comptroller has no discretion in regards to that matter. The section is very clear that where an offence has been committed in relation to goods, the Comptroller is obliged to forfeit the goods.

13. I now turn to the sentence in this case.

14. Every business has a legal obligation to pay taxes to the state. Taxes are a necessary means by which the state raises the necessary funds to carry out its services to the nation. Without money, the state will not function effectively and without taxes, the state won't be able to raise the needed money.

15. These taxes come in various forms of which import duties and goods tax are just two of them. Of course many people do not like paying taxes and who wouldn't if you are living in a country like Solomon Islands where the cost of living is sky rocketing each year. It's a drain on people's hard earned income.

16. Fortunately, however, the tax laws have not only imposed obligations to pay these taxes but they have also provided proper and legal ways by which the payment of these taxes can be reduced or even avoided. This is called tax avoidance. The opposite of tax avoidance is tax evasion which the illegal way of avoiding the payment of taxes.

17. This is what happened in the present case. The accused had tried to evade payment of her taxes by designing a strategy which involved the creation of false documents in an attempt to deceive the state. It is dishonesty of a very high order. Such conduct would certainly deserve a very severe penalty. This is the view of the courts in this jurisdiction as confirmed by the Court of Appeal in the Uhla Thien v Reginam. 

18. Having said that, I am satisfied there are a number of mitigating factors which needed to be taken into account in determining the appropriate sentence to impose on the accused. These include the fact that the accused's guilty plea and the fact that she is a first offender. I also take into account the fact she took the initiative to confess her wrong doing to the police upon realizing her mistakes. Furthermore, I take into account the fact that she has children, parents and her business to care for. I have also taken into account the fact that she has lost her goods as the Comptroller had forfeited them. I also take into account the fact that the Comptroller had opted to impose on her the harsher treble value penalty instead of the $2,000.00 fine. I have also taken into account the fact that the accused had already paid $17,990.68 as duty to the Comptroller and the delay in expeditiously pursuing this case to completion since October 2009.

19. For the purposes of parity in sentencing, I have considered penalties imposed for similar offences both locally and overseas. In R v Rang & Other, fines were imposed on the accuseds ranging from $200.00 to $3,000.00. In R v Thien & Another, the penalties imposed were $628,754.00 and $629,554.00. These obviously included the value of the goods forfeited which have been reduced by around 20%. I have also considered the judgments in Regina v Namtasaeng [2010] SBHC 9 and the Kiribati case of Biketi v The Republic of Kiribati [2003] KICA 3 where the accused was fined $54,000.00 and imprisoned for 2 years. The penalties imposed in these cases are a clear demonstration of the courts' view of the gravity of these types of offences.

20. Having taken into account these aggravating features and mitigating factors as well as the range of sentences imposed in the cases above mentioned, it is my view that the appropriate sentences in this case should be as follows:-

[1] In regards to count 1, the accused should pay a fine of $1,000.00.

[2] In regards to count 2, the Comptroller had opted to apply the treble value penalty which is $303,135.00. That is the maximum penalty. However, in my view, this maximum penalty should be reduced by 30%. This brings the amount down to $212,194.50. From that figure is to be deducted $17,990.68 which represents the duty which has already been paid by the accused to the Customs Department. I further order that the sum of $101,045.00, which represents the value of the goods to be forfeited to the Crown, be further deducted. This leaves the balance of $93,158.82 (rounded up to $93,000.00) to be paid by the accused by way of penalty for the offence under section 213(e) of the Customs Act. The accused is a business woman. She has not produced evidence that she could not afford this amount. I am therefore entitled to assume that she is well able to meet this figure.

21. The sentences I impose in this case are therefore as follows:

[1] Count 1: the accused to pay a penalty of $1,000.00 within 7 days from today's date, in default 1 month imprisonment.

[2] Count 2: the accused to pay a penalty of $93,000.00 within 60 days from today's date, in default 3 months imprisonment.

22. In addition to the above sentences, I order that the 77 packages of mixed goods imported by the accused be forfeited to the Crown.

THE COURT