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Commissioner of Inland Revenue v Ali [1995] FJHC 75; Haa0064d.93s (19 April 1995)

IN THE HIGH COURT OF FIJI
AT SUVA
APPELLATE JURISDICTION

CRIMINAL APPEAL NO. HAA0064 OF 1993

Between

COMMISSIONER OF INLAND REVENUE
Appellant

And

SHAMSHAR ALI
Respondent

Counsel: Mr. Bale for Appellant
Respondent in person

Hearing: 19th April 1995
Decision: 19th April 1995

ORAL DECISION OF PAIN J.

This is an appeal by the Commissioner of Inland Revenue against the sentence imposed by a Magistrate on three charges under Section 50(1) and 96(1) of the Income Tax Act. These charges alleged default by the Respondent in complying with a demand from the Commissioner to supply tax returns for the years 1987, 1988, 1989, and 1990 and detailed statements of assets and liabilities and analyses drawings for the same years.

Notice was given by the Commissioner on the 28th May 1992, requiring the three categories of information by the 28th June 1992. The notice was not complied with and default commenced on the 29th June 1992. On the 30th November 1992 the three charges were laid in the Magistrates Court. They first came on for hearing on the 11th January 1993 and there were several adjournments. On the 26th May 1993, full compliance with the notice was made to the satisfaction of the Commissioner. On the 28th May 1993, the Respondent pleaded guilty to the three charges. He was convicted and fined $40 on each charge.

The culpable period of default is 331 days from the 29th June 1992 until the 26th May 1993. On each charge, the Respondent is liable to a potential penalty of a maximum of $40 per day for that period of default.

These charges represent a serious breach. This is reflected in the maximum penalty prescribed. Moreover in this case there was a very long delay in complying with the notice. A period of some eleven months. This had been preceded by default in the Respondent's legal obligation to file tax returns for periods of up to four years.

There have been a number of decisions of this court which make it clear that sentences must be imposed for these offences which clearly reflect the gravity of the offending. I need not repeat what has been said in those cases. Suffice it to say that a fine of $120 for such prolonged default is totally inadequate. In the circumstances I have briefly outlined the inadequacy of the penalty is clearly manifest. On the face of it the sentence is so manifestly inadequate that there must have been some error in the sentencing discretion.

However, there are some mitigating circumstances that can be taken into account to moderate the penalty. According to the record, the prosecutor advised that the Respondent had no previous convictions and this was accepted by the Magistrate. The notice was finally complied with although all that does is to bring an end to the period of culpable default. The Respondent explains that he did nothing about filing tax returns until he received the notice from the Commissioner. Thereafter he had difficulty in locating all his records, had some health problems and was required to pay an accountant to do the work for him. However it remained his obligation to file tax returns. He must have been fully aware of the requirements because he said that he had regularly filed tax returns prior to 1987.

The Respondent's tax liability for the four years in respect of which the returns were filed came to only $336.57 according to the Inland Revenue receipt that he produced to the Magistrate. This does not indicate a thriving business with a substantial tax liability.

Finally the Respondent has limited means. He says that his health problems reduce his ability to work and he does not have a regular income.

These factors combine to give reasons for some reduction of the level of fine that such serious offending would otherwise attract. Moreover allowance must be given for the Respondent's "double jeopardy" and now having to pay an increase penalty two years after the original fine was imposed.

In fixing the appropriate penalty, consideration must be given to the totality of the offending represented by the three charges. However the proceedings in the Magistrates Court and in this Court have focused only on the charge of failing to file tax returns. In respect of the other two charges no facts were given in the Magistrates Court and no specific submissions have been made on them in either the Magistrates Court or this court. That makes it difficult to assess culpability for the default in respect of those matters.

In my view the justice of the situation will be met if I allow the penalty on those two charges to stand and impose a more realistic penalty on a more substantive and serious charge of failing to file tax returns as required by the notice. That would give the Respondents some allowance for the mitigating factors.

In all the circumstances I intend to fix the fine on the charge in relation to the tax returns at the rate of $1.50 per day for the period of default of 331 days. That is a total of $496.50. The Respondent will of course be given allowance for the fine imposed by the Magistrate that has already been paid on this charge. I stress that for the reasons already given, this overall penalty for the three charges is less than might have reasonably been imposed at first instance.

The Appellant also appeals against the failure of the Magistrate to make any order for costs. Counsel submitted that the Respondent should have been ordered to pay costs.

A discretion for this is clearly given by Section 158 of the Criminal Procedure Code. A Magistrate may order that a person convicted of an offence pay a public or private prosecutor such reasonable costs as to the Magistrate may seem fit.

I agree that an award of costs can reasonably be expected on a successful prosecution in these cases. I would expect a specific application for costs to be made by the prosecutor. The Magistrate would have, of course, a general discretion to be exercised in the circumstances of each particular case.

In this case the Commissioner was represented in the Magistrates Court by a lay prosecutor and no request was made for costs. I was told from the bar that the practice hitherto in the Suva Magistrates Court has only been to make an award of costs if it is asked for. In these circumstances, there is nothing to indicate that the Magistrate was in error in failing to consider the question of costs or make an order. It is not appropriate for me to embark afresh on the matter in the particular circumstances of this case.

Accordingly I make the following order:

1. The appeals against the penalty of a fine of $40 imposed in the Magistrates Court in respect of the charges of failing to deliver statements of assets and liabilities as demanded by the Commissioner and failing to deliver analyses of drawings as demanded by the Commissioner are dismissed.
   
2. The appeal against the sentence imposed in respect of the charge of failing to deliver returns of income as demanded by the Commissioner is allowed. The sentence of a fine of $40 imposed in the Magistrates Court is quashed and in substitution therefore the Respondent is fined the sum of $1.50 per day for 331 days making a total fine of $496.50. The Respondent is given three months to make payment.
   
3. The appeal against the failure of the Magistrate to make an award of costs is dismissed.
   

JUSTICE D.B. PAIN

HAA0064D.93S