BRAITRIM (FAR EAST) LTD v. COMMISSIONER OF INLAND REVENUE

CACV 45/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 45 OF 2012

(ON APPEAL FROM BOARD OF REVIEW CASE NO B/R 97/09)

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J U D G M E N T

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Hon Barma JA (giving the judgment of the Court):

1. On 6 December 2012, we dismissed the Appellant Taxpayer’s appeal against the decision of the Inland Revenue Board of Review dated 23 August 2011. The Taxpayer now applies, by Notice of Motion dated 24 December 2012, for leave to appeal further to the Court of Final Appeal. The application is made on two bases:-

(1)  That an appeal to the Court of Final Appeal lies as of right pursuant to the first limb of section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance (Cap 484) (“the CFAO”), because the matter in dispute on the appeal, which the Taxpayer characterizes as the profits tax liability under the additional assessments raised against it for the years of assessment 2000/01 to 2002/03, exceeds HK$1 million.

(2)  That leave to appeal should be granted under section 22(1)(b) of the CFAO because the proposed appeal raises questions of great general or public importance concerning the scope and application of sections 2, 16, 16G and 17 of the Inland Revenue Ordinance (Cap 112) (“the IRO”).

2. In our view, the proposed appeal does not fall within the first limb of section 22(1)(a) of the CFAO.

3. That limb has consistently been narrowly construed as being applicable only to liquidated claims, so as to limit the cases in which a further appeal to the Court of Final Appeal lies as of right.  The reasons for this approach were explained in China Field Ltd v Appeal Tribunal (Buildings) (2009) 12 HKCFAR 68.  Although that case was concerned with an application under the second limb of section 22(1)(a) of the CFAO, Ribeiro PJ made it clear (at para 18 of the judgment) that the narrow construction given to the first limb was to be maintained, and that the second limb should be construed consistently with that.

4. In the case of appeals from the Board of Review as to the correctness of tax assessments made by the Commissioner of Inland Revenue (“CIR”), it has been held, both by the Court of Appeal and the Court of Final Appeal, that the first limb of section 22(1)(a) of the CFAO does not apply: see CIR v CG Lighting Ltd (CACV 119/2010, 5 May 2011 (CA) and FAMV 23/2011, 24 August 2011 (CFA)).  As Bokhary PJ put it at para 2 of the Court of Final Appeal’s determination:

“Monetary claims which require assessment – and are therefore unliquidated rather than liquidated – do not come within section 22(1)(a). Tax requires assessment. So tax demands do not come within section 22(1)(a). The appeal which the taxpayer seeks to bring does not lie as of right”.

5. Although it is right to say that in that case, the assessment had been remitted by the Board of Review to the CIR for further consideration, this does not seem to have been a factor that was regarded by the Court of Final Appeal as relevant for the purposes of section 22(1)(a).

6. We are therefore satisfied that no appeal lies to the Court of Final Appeal as of right.

7. Turning to the application under section 22(1)(b), we are unable to agree with Mr Barlow that the appeal raises any point of great general or public importance, such as ought to be referred to the Court of Final Appeal for their consideration.  The arguments that are sought to be advanced before the Court of Final Appeal are the same as those raised before us, which we rejected.  For the reasons explained in paragraphs 13 to 18 of our judgment, the construction of the IRO advanced by the Taxpayer is not tenable. In these circumstances, even if there were, as the Taxpayer suggests, considerable interest or dissatisfaction, on the part of taxpaying manufacturers, with the outcome of the appeal to this court, it would not be appropriate to give leave to the Taxpayer to bring an appeal before the Court of Final Appeal which, in our view, has no realistic prospect of success.

8. For these reasons, this application is dismissed.

(Discussion as to costs)

9. The Taxpayer is to pay the CIR’s costs of this application, to be taxed if not agreed.