SC1170

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 10 OF 2009 (H)

BETWEEN:

SOUTHERN HIGHLANDS PROVINCIAL
GOVERNMENT
Appellant

AND:

PAGINI TRANSPORT LIMITED
Respondent

Mount Hagen: Hartshorn, Kariko and Murray JJ
2011: 29th November
2012: 7th March

APPEAL - Southern Highlands Province Sales and Services Tax Act 1996 - whether retrospective in operation

Facts:

The appellant appeals the National Court dismissal of its action that claimed sales tax from the respondent. The appellant had issued to the respondent in June 1998, assessment notices under the Southern Highlands Province Sales and Services Tax Act 1996 (Tax Act 1996) for the period, January 1992 to December 1996. The Tax Act 1996 came into force on 24th October 1996. The respondent denied liability on the basis that the Tax Act 1996 did not have retrospective effect to permit taxation recovery for the subject period.

Held:

1. The appellant has to persuade this court that the decision of the trial judge was wrong for this court to be justified in interfering with it.

2. A statute is not to be given retrospective operation unless there is perfectly clear language showing the intention of Parliament that it shall have a retrospective application: Director of District Administration v. Sacred Heart Mission (New Britain) Property Trust [1974] PNGLR 312 and Croxford v. Universal Insurance Co Ltd [1936] 2 KB 253 at 281, followed.

3. The trial judge did not fall into error in forming the view that the Tax Act 1996 does not apply retrospectively, but prospectively. 

4. The assessment notices that were issued under the Tax Act 1996 were defective as they are in respect of a period of time before the Tax Act 1996 came into force and in respect of tax that is not due and payable under the Tax Act 1996. 

Cases Cited:

Papua New Guinea Cases
Director of District Administration v. Sacred Heart Mission (New Britain) Property Trust [1974] PNGLR 312
MAS International Ltd v. David Sode (2008) SC944 

Overseas Cases
Croxford v. Universal Insurance Co Ltd [1936] 2 KB 253

Counsel:
Mr. P. K. Kunai, for the Appellant
Mr. K. J. Peri, for the Respondent

7th March, 2012

1. BY THE COURT: The appellant appeals the National Court dismissal of its action that claimed sales tax from the respondent. The appellant had issued to the respondent in June 1998, assessment notices under the Southern Highlands Province Sales and Services Tax Act 1996 (Tax Act 1996) for the period, January 1992 to December 1996. The Tax Act 1996 came into force on 24th October 1996. The respondent denied liability on the basis that the Tax Act 1996 did not have retrospective effect to permit taxation recovery for the subject period.

Grounds of appeal

2. The grounds of the appeal of as follows:

"(a)	The learned judge erred in law in holding that the Sales & Services Tax Assessment Notices issued to the Respondent by the Appellant pursuant to the provisions of the Southern Highlands Provincial Sales & Services Act No. 2 of 1996 were defective as they were issued under a repealed legislation.

(b)	The learned judge erred in law in holding that the Respondent was not liable to pay the sales and services tax as assessed because the Tax Assessment Notices were issued under a repealed legislation.

(c)	The learned judge erred in law in holding that the Southern Highlands Provincial Sales & Services Tax Act No. 2 1996 did not have retrospective effect and therefore the Tax Assessment Notices issued to the Respondent by the Appellant were defective and the Respondent was not liable to pay the tax as assessed."

3. We consider ground 2 (c) first as its resolution will determine the appeal.

Appeal principles

4. The appellant submits that this court must not disturb the findings or orders made by the trial judge unless it is satisfied that the trial judge has made findings which are not supported by evidence, or applied wrong principles of law or misapprehended the facts. The respondent did not oppose this submission. While agreeing with this submission we state the principle simply, that the appellant has to persuade this court that the decision of the trial judge was wrong for this court to be justified in interfering with it.

Appeal ground 2 (c)

5. The appellant submits that s. 25 (2) Tax Act 1996 allows for the Tax Act 1996 to have retrospective effect and that the tax assessment notices issued by it to the respondent were valid. Section 25 (2) is not ambiguous, it is submitted and the trial judge erred by not giving s. 25 (2) its true meaning and instead held that it was only a saving provision.

6. Section 25 (2) Tax Act 1996 is as follows:

"25. REPEAL

(1)	subject to Subsection (2) the Southern Highlands Province Sales and Services Tax Act 1987 is repealed.

(2)	Sales Tax and Services Tax due and payable under the repealed Act are not abrogated, and are due and payable to the Southern Highlands Provincial Government as a debt."

7. As to interpreting taxation statutes, this court in MAS International Ltd v. David Sode (2008) SC944 said:

"As a matter of general principle, all tax legislations (sic) including the Act must be interpreted strictly and given their plain and ordinary meaning. See, Collins & Leahy Limited v. Collector of Stamp Duties (2001) N2150, Internal Revenue Commission v. Dr. Pirouz Hamidian-Rad (2002) SC692, Norah Mairi v. Alkan Tololo (1976) PNGLR 125, Misima Mines Ltd v. The Collector of Customs (2003) N2497, Chief Collector of Taxes v. Bougainville Copper Ltd (2007) SC853, Misima Mines Ltd v. The Collector of Customs & Anor (2007) N3206."

8. The plain and ordinary meaning of s.25 (2) is that tax due and payable under the repealed Act is due and payable to the appellant. This is clear and unambiguous. There is nothing in s. 25 (2) however, that permits the recovery under the Tax Act 1996 of tax due and payable under the repealed Act, and nothing in s. 25 (2) to suggest that the Tax Act 1996 applies to a period of time before the Tax Act 1996 came into force.

9. That it is necessary that it be clear from the wording of a statute that it has retrospective operation is specifically and correctly in our view, addressed by the trial judge. The authorities that the trial judge cites are on point, as is his reasoning. We would only add a reference to Director of District Administration v. Sacred Heart Mission (New Britain) Property Trust [1974] PNGLR 312 in which Kelly J, relying upon Croxford v. Universal Insurance Co Ltd [1936] 2 KB 253 at 281, said:

"There is a further principle that a statute is not to be given retrospective operation unless there is perfectly clear language showing the intention of Parliament that it shall have a retrospective 	application."

10. There is nothing in the Tax Act 1996 to indicate an intention that it shall have retrospective application. We are satisfied that the trial judge did not fall into error in forming the view that the Tax Act 1996 does not apply retrospectively, but prospectively. Consequently, the assessment notices that were issued under the Tax Act 1996 were defective as they are in respect of a period of time before the Tax Act 1996 came into force and in respect of tax that is not due and payable under the Tax Act 1996.

11. Given the above it is not necessary to consider the other grounds of appeal. Further, as to the issue of the respondent not filing an objection to the assessment notices, this is not considered as it does not form part of the grounds of appeal.

Orders

a)	The appeal is dismissed.

b)	The appellant shall pay the respondent's costs of and incidental to the appeal.	
_______________________________________________________
Kunai & Co. Lawyers: Lawyers for the Appellant 
Warner Shand Lawyers: Lawyers for the Respondent