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Commissioner of Inland Revenue v Rubine [1995] FJHC 36; Haa0079d.1993s (17 February 1995)

IN THE HIGH COURT OF FIJI
AT SUVA
APPELLATE JURISDICTION

CRIMINAL APPEAL NO. HAA0079 OF 1993

Between:

COMMISSIONER OF INLAND REVENUE
APPELLANT

And:

GEORGE RUBINE
RESPONDENT

Counsel: Mr. Blakely and Mr. Bale for Appellant
Mr. Raza for Respondent

Hearing: 25th October 1994
Decision: 17th February 1995

DECISION OF PAIN J.

This is an appeal by the Commissioner of Inland Revenue against a discharge pursuant to Section 44 of the Penal Code given to the Respondent in the Magistrates Court on three charges under Section 96(l) of the Income Tax Act of failing to deliver tax returns and other information to the Commissioner as required under Section 50(l) of the Act.

The Respondent failed to file tax returns by due date for the years l986, l987, l988, l989 and l990. On 22nd January l992 the Commissioner gave notice requiring those returns together with details of assets and liabilities and drawings for the same years to be supplied by 24 February 1992. This was not done and on 30th November 1992 the Commissioner laid the three charges alleging default from 24th February 1992 to 2nd November 1992. These charges were adjourned on several occasions. On 8th February 1993 the Respondent complied with the notice to the satisfaction of the Commissioner. According to the record of the Magistrates Court the Respondent pleaded guilty to the charges on 21st June 1993, the prosecutor and defence counsel made submissions and the learned Resident Magistrate adjourned the case to 25th June 1993. There follows in the record a Ruling of the Magistrate (undated) in the following terms:

"Full compliance made. This was confirmed by the Prosecutor. I have considered the mitigation of the learned defence counsel. I think this is an appropriate case for discharge under S.44 in the light of the mitigation. I discharge the accused on condition accused to pay $90 court cost ($30 per count). 28 days to pay in default 2 months."

Counsel for the Appellant relied on the grounds contained in Paragraph 4(i) to (iv) of the Petition of Appeal. In brief, it was submitted that the learned Resident Magistrate made an error of law in granting a discharge. Section 206 of the Criminal Procedure Code required the Magistrate to convict the Respondent and pass sentence. Section 44 of the Penal Code should not have been applied because it was expedient to inflict punishment for the offence. The matters pleaded in mitigation did not warrant the exceptional order for a discharge. A conviction and fine should have been imposed.

Counsel for the Respondent submitted that the Magistrate had ample opportunity to ascertain all the facts of the case and assess the gravity of the offending. He stressed that full compliance had been made and submitted that there is nothing on the face of the record to indicate that the Magistrate had wrongly exercised his discretion to discharge the Respondent.

There is a wealth of authority in this Court showing that a discharge or nominal penalty is unlikely to be an appropriate sentence for charges of this nature. See, for instance, A.G. v. Hari Chand 14 FLR 245; Commissioner of Inland Revenue v E.A. Wendt, Criminal Appeal No. 76 of 1990, Commissioner of Inland Revenue v M.S. Macaskall Criminal Appeal No. 74 of 1991 and Commissioner of Inland Revenue v P.S. Qauqau, Criminal Appeal No. 92 of 1992 (Lautoka H.C.).

I recently considered this issue myself in Commissioner of Inland Revenue v Patel, Criminal Appeal No. 14 of 1994. The principles enunciated in that decision have similar application here. In that case I referred to the earlier decisions and noted that the power to grant a discharge should be exercised sparely.

For most offences of this type a conviction and appropriate sentence should be imposed upon a finding or plea of guilty. I held that the exercise of the discretion to grant a discharge was wrong in principle as the Magistrate failed to properly take into account the circumstances of and gravity of the offending.

In this case the proceedings in the Magistrates Court and on appeal were primarily concerned with the charge of failing to file tax returns as required by the notice from the Commissioner. That was a serious breach. The default continued for almost a year from the 24th February 1992 to the 8th February 1993. It was aggravated by the earlier long default of up to five years by the Respondent in fulfilling his obligation to file returns and because the default was in respect of 5 separate tax years. Such serious offending demands a conviction and realistic penalty.

In the Magistrates Court the Respondent advanced no explanation for his default except for his counsel's submission that there were "too many years involved, so not easy to comply". However such a long default compounds rather than mitigates the Respondents culpability. The learned Resident Magistrate said that he "considered the mitigation of the learned defence counsel" in arriving at his decision to grant a discharge. The only other factors advanced were that full compliance had been made, the Respondent was a first offender and an assurance was given that the offence would not be repeated. These matters amount to only moderate mitigation. Ultimate compliance (normally after a series of adjournments of the prosecution) is not unusual in these cases. It is a favourable circumstance and brings the culpable default to an end. However, it cannot excuse the default that has already occurred. Likewise the lack of previous convictions is a favourable consideration but, again, it is not unusual in these cases and a penalty must still be imposed that is appropriate for a first offence of this nature. This is not the type of offending for which repentance and an assurance not to re-offend is of great significance.

In the circumstances of this case, the default by the Respondent was substantial and serious. There were no significant mitigating circumstances. In particular, no explanation or extenuating circumstances were advanced by the Respondent for the substantial default and long delay in compliance. The learned Resident Magistrate could not have given proper consideration to the gravity of the offending. This was not an appropriate case for a discharge. The exercise of such a discretion was wrong in principle as the learned Magistrate failed to take into account the circumstances of, and gravity of the offending. As a result the Respondent has been discharged which is an unduly lenient sentence for the offending. This was not a case where it was inexpedient to inflict punishment. The proper course was to convict the Respondent and impose of a monetary penalty. This should now be done.

In fixing the appropriate penalty notice must be taken of the provisions of the statute. The maximum fine expressed as a daily rate is $40.00 per day. Counsel for the Appellant accepts that the limitation period of six months imposed by Section 219 of the Criminal Procedure Code applies in these cases. The culpable period of default is therefore 254 days from the 30th of May 1992 to the 8th of February 1993. It has been the practice of the Courts in these cases to impose a sentence on the basis of a daily rate. I am not convinced that this is necessary. The more flexible approach illustrated by the judgment of McGechan J. in Inland Revenue Department v MacLeay 1990 12 NZTC 7084 has much to commend it. However this has not been raised as an issue on the appeal. In the circumstances, I will not depart from the current practice of imposing a fine on the basis of a daily rate.

There are three separate charges arising from the one notice. In Commissioner of Inland Revenue v Patel (supra) I expressed some reservations regarding this practice. However I explicitly stated that "the issue was not argued at the hearing and counsel have not had the opportunity to make submissions on it". This issue was adverted to by counsel for the Appellant at the hearing of this appeal. However it is not an issue requiring finite determination. The fact that three charges were laid is not a ground of appeal and the matter has not been challenged by Counsel for the Respondent. It is clear that a standard form of notice requiring three categories of documents and the practice of laying separate charges for each category has a long history.

Counsel for the Appellant noted that it goes back at least to 1967 as shown by the decision of Ram Hira v R. 1967 13 FLR 176. He also emphasised that the notice from the Commissioner specifically demanded three categories of information. He described it as a notice containing three demands and pointed out that Section 96 of the Income Tax Act provides a penalty for "every default" in complying with the notice. The validity of the practice of laying more than one charge is an interesting point which remains open for determination. The issue of duplicity may also need to be considered. I have given no finite ruling that only one charge can be laid or punished. The matter will need to be determined if argued as a specific issue on some future occasion.

If the Commissioner adheres to the traditional form of notice and the laying of three charges the normal principles and jurisprudence of the criminal law must still be applied. The three charges are separate and distinct and require separate consideration and penalty. Moreover, in fixing the total penalty regard must be given to the overall criminality represented by the three charges. A proper summary of facts must be given on each charge to enable the Court to fix an appropriate penalty. The culpability in respect of the separate charges, is unlikely to be the same. For instance the charge of failing to furnish tax returns is clearly viewed as more serious then the other defaults. Moreover the default in filing the tax returns is likely to have had a prior history of delay and the notice has been required to enforce the taxpayers statutory obligation. The other information demanded is likely to be ancillary to the filing of the return and full compliance may be inappropriate or not required by the Commissioner after the tax returns have been filed. Accordingly the charges should be considered separately and an appropriate penalty imposed on each, having regard to its gravity and bearing in mind an appropriate overall penalty for the totality of the offending. In Commissioner of Inland Revenue v. Patel (supra) I considered that it was appropriate to impose a penalty only on the charge relating to the default in respect of filing tax returns. No information had been made available and no submissions addressed in the Magistrates Court or on appeal in respect of the other two charges. In doing so I was not intending to lay down an inflexible rule for these cases. Each case must be considered on its own merits.

In the present case fines must be imposed that are appropriate for the offending. There has been no submission that the Respondent lacks the means to pay. The substantial focus in the Magistrates Court and in this Court has been on the charge of failing to file tax returns. Bearing in mind the matters I have already mentioned and the principles for increasing a sentence on appeal I consider that the appropriate penalty in this case would be fines on a daily basis of $2.00 per day in respect of the charge of failing to file tax returns and 35c per day on each of the other two charges. That makes a total of $2.70c per day which, for 254 days, amounts to a total fine of $685.80. That is an appropriate overall penalty for the totality of this offending.

Accordingly, the appeal in respect of the three charges is allowed. On the charge of failing to file tax returns, the discharge on condition of payment of costs of $30 imposed in the Magistrates Court is quashed and in substitution therefore, the Respondent is convicted and a fine of $2.00 per day for 254 days (being $508) is imposed. On the other two charges the discharges on condition of payment of costs of $30 on each charge imposed in the Magistrates Court are quashed and in substitution therefore the Respondent is convicted and a fine of 35 cents for 254 days (being $88.90) is imposed on each charge. That is a total of $685.80 on the three charges.

JUSTICE D.B. PAIN

HAA0079D.93S