025-SLLR-SLLR-2008-V-2-CEYLON-OXYGEN-LTD.-v.-BIYAGAMA-PRADESHIYA-SABHAWA-AND-OTHERS.pdf
CA Ceylon Oxygen Ltd. v Biyagama Pradeshiya Sabhawa and others 245
CEYLON OXYGEN LTD.v
BIYAGAMA PRADESHIYA SABHAWA AND OTHERSCOURT OF APPEALSRISKANDARAJAH, J.
CA 501/2005
MARCH 14, 21,28, 29-2007JUNE 4, 2007
Pradeshiya Sabha Act No. 15 of 1987 – Sections 2(3), 157(2), 158, and 160,Levying of rates on immovable property – Seizing of movable property legality -No reason given – Not pleaded – Consequences? – Seizure under warrant – No
specific authority to seize an item – Ultra vires? – Disputed questions of fact -Writ lies?
The respondent issued a statutory notice of assessment indicating that, themachinery and plant were considered as immovable property. The petitionercontended that, the said plant/machinery is movable property and therefore notliable for tax under Section 157 (2). Subsequently the respondent seized abrowser containing liquid Nitrogen, as the tax was not paid. The petitionerchallenged the said seizure and the order to pay tax on the plant and machinery.
It was contended that, the respondents had not given any reasons for thedecision and that, at the point of seizing the bowser the revenue officer was notconferred with any statutory power to come to any decision or to make adetermination to seize a particular item. It was further contended that, Section157 authorizes the Pradeshiya Sabhawa to levy tax on immovable property andnot on movable property.
Held:
The petitioner has not challenged the impugned order in the petition on theground that no reasons were given for the said decision. If this ground wasraised in the petition the respondents would have had an opportunity todisclose the reasons to support the said decree.
In the absence of a specific statutory provision to give reasons, reasonsneed be communicated but if the reasons are given and if it is in the file ofthe relevant authority would be substantiate compliance with the requirementof the duty to give reasons.
246Sri Lanka Law Reports(2008] 2 Sri L.R
Per Sriskandarajah, J.
“The failure of the petitioner to raise the objection in the petition had deprived the
respondent from disclosing reasons in support of his decisionthis objection
cannot be considered by Court.
Held further:
The main challenge to the decision is on the basis that the plant machineryand the fixtures in the said property are movable property. This is a disputedquestion of fact and it cannot be determined in these proceedings. Theappropriate forum to determine whether the plant, machinery and the fixturesare movable properties in the District Court.
It is revealed that the seizure was under Section 158 (1) in terms of a warrantsigned by the 3rd respondent issued to the 4th respondent. The 4threspondent – Revenue Inspector was not given specific authority to seize thebowser under the warrant but was given a general authority to seize movableproperty. When executing the warrant the 4th respondent had used hisdiscretion and decided to seize the bowser which contains Nitrogen – this actof seizing the bowser is ultra vires the provisions of Section 160 – as thebowser seized is a restricted article under Section 160 of the Act.
APPLICATION for a writ of certiorari.
Cases referred to:
Thajudeen v Sri Lanka Tea Board and another 1981 2 Sri LR 471.
R v Fulham etc Rent Tribunal exp Zerek 1951 2 KB.
R v Home Secretary exp. Zamir 1980 A1 930-949.
Abayadeera v Dr. Stanley Wijesundera Vice-Chancellor University ofColombo 1983 2 Sri LR 767.
Culasubadhara v University of Colombo 1985 1 Sri LR 244.
J.B. Textile Ltd. v Ministry of Finance and Planning 1981 2 Sri LR 238.
Kusumawathie and others v Aitken Spence and Another 1996 2 NLR 18.
Yassen Omar v Pakistan International Lines Corporation Ltd. 1999 2 NLR375.
R v Higher Education Funding Council ex parte Institution of DentalSurgeons.
R. v Civil Service Appeal Board ex parte Cunningham.
Doody v Secretary of State.
William Singho v AG A Matara 41 NLR 215.
De Silva v Konnamalai 30 NLR 128.
Fernando v Nelum Gamage Bribery Commissioner 1994 3 Sri LR 194.
R v Inland Revenue Commissioner, ex-parte Ross Minister Ltd. 1980 Al 952.
Mohan Peiris PC with Nuwanthi Dias for petitioner.
Dr. Sunil Cooray for respondents.
Ceylon Oxygen Ltd. v Biyagama Pradeshiya Sabawa and othersCA( Sriskandarajah, J.)
September 3, 2007SRISKANDARAJAH, J.
The petitioner is a public quoted company engaged in the businessof production of industrial & medical gases and liquids. Itsancillary businesses include the trading of electrodes,transformers, medical equipments and imported gases. Thepetitioner in May 1998 established and commissioned an airseparation plant at Sapugaskanda Biyagama industrial estate.The petitioner submitted that the air separation plant is mountedon the base of a container with a vertical cold box being bolted tothe ground and the pre-liquid storage tank stands on the ground.The control panel is also mounted inside the container. In termsof the Pradeshiya Sabhas Act No. 15 of 1987 a Pradeshiya Sabha"may, subject to the approval of the minister, impose and levy arate on the annual value of any immovable property or anyspecies of immovable property situated in localities declared bythe Pradeshiya Sabha." By gazette notification dated 3rd March2000, the local authority published its intention of imposing a 5%tax on the annual value of the properties within its jurisdiction.
The petitioner was served with a statutory notice of assessmenton the 7th of August 2000 for the years July 1998 to December 1998,1999 and 2000. The petitioner disputed the said assessment on thebasis that the said assessment had included the movable property inthe said assessment namely; air separation plant and the petitionerindicated that it is willing to pay the tax on the immovable property.The position of the 3rd respondent is that the machinery and theplant were considered as immovable property and that therespondent would not be amending or reducing the amount alreadycalculated. The petitioner had been served with another statutorynotice of assessment on the 1st January 2001 for the same amountthat was set out in the previous notice. The 3rd respondent madeanother request to pay the said amount stipulated in the earlier noticeof assessment by his letter dated 2nd July 2001. On the 7th ofFebruary 2002 the 3rd respondent informed the petitioner that the 1 strespondent would proceed to take steps in terms of Section 158 ofthe said Act in the event the petitioner failed to pay the tax asinformed.
The petitioner submitted that the 1 st respondent has failed and /orneglected to consider the several appeals made by the petitioner in
248Sri Lanka Law Reports[2008] 2 Sri L.R
terms of the said Act and continued to demand the petitioner topay the tax. The petitioner was served with a final notice dated10.10.2003 before the seizure of the property. On the request of thepetitioner the 3rd respondent by letter dated 30th October 2003provided the petitioner the manner in which the property has beenassessed and the breakdown of the sum claimed as tax. Thepetitioner was also served with the notice of assessment for the year2004 on the same basis. The objections to the said assessmentswere investigated and a decision was communicated to the petitionerby letter dated 31.12.2004 by the 2nd respondent that no change tobe made to the assessment already made. The petitioner submittedthat on 11th March 2005 the 4th respondent arrived at the factorypremises of the petitioner, seized and took into his custody a bowsercontaining liquid hitrogen.
The petitioner in this application has sought a writ of certiorari toquash the decision of the respondent to impose a tax on movableproperty of the petitioner (namely plant and machinery) as intimatedby letter dated 31st December 2005, a mandamus to re-assess thepetitioner's property in terms of the law and a writ of certiorariquashing the decision to seize the bowser of liquid nitrogen for thenon-payment of tax.
The petitioner's main contention in the said application is that theimposition of tax on movable property (plant and machinery) iscontrary to the provisions of the Act wherein it is expressly stated inSection 134(1) that "every Pradeshiya Sabha may subject to theapproval of the Minister, impose and levy a rate on the annual valueof any immovable property or any species of immovable propertysituated in locations declared by the Pradeshiya Sabha as built uplocations. The respondent contended that the decision conveyed bythe letter of 31.12.2004 has been made after the investigation heldas required by Section 141(5) in the presence of the authorisedrepresentatives of the petitioner. The respondent has assessed thetax on the basis that the plant and machinery of the petitioner in thesaid premises are permanently affixed to the ground and areirremovable, and constitute immovable property within the meaningof the Pradeshiya Sabha Act.
The main challenge to the said decision is on the basis that theplant, machinery and the fixtures used by the petitioner in the saidproperty are movable property and it cannot be considered as
Ceylon Oxygen Ltd. v Biyagama Pradeshiya Sabawa and others
CA(Sriskandarajah, J.)249
immovable property. This is a disputed question of fact and thisquestion cannot be determined in these proceedings. In Thajudeen .v Sri Lanka Tea Board and Another) the Court held:
"Where the major facts are in dispute and the legal result of thefacts is subject to controversy and it is necessary that thequestions should be canvassed in a suit where parties wouldhave ample opportunity of examining the witnesses so that theCourt would be better able to judge which version is correct awrit will not issue."
Devilin, J. in v Fulham etc. Rent Tribunal exp. Zerett2) held:
"Where the question of jurisdiction turns solely on a disputedpoint of law, it is obviously convenient that the court shoulddetermine it then and there. But where the dispute turns to aquestion of fact, about which there is a conflict of evidence, thecourt will generally declined to interfere."
Lord Wilberforce in fl v Home Secretary exp. Zamifc) at 949similarly described the position of the court, which hears applicationsfor judicial review:
"It considers the case on affidavit evidence, as to which cross-examination, though allowable does not take place in practice.
It is, as this case will exemplify, not in a position to find out thetruth between conflicting statements."
On the other hand the Pradeshiya Sabha Act under Section142(1) provides that any person aggrieved by the decision of theassessment of any property could institute an action in the DistrictCourt. Section 142(3) provides that every such court shall hear anddetermine such action according to the procedure prescribed by lawfor the time being in force, for the hearing and determination of civilaction and that decision of such court shall in all cases be subject toappeal to the Court of Appeal. Hence the District Court is theappropriate forum to determine whether the plant, machinery and thefixtures used by the petitioner in the said property are movableproperty or immovable property under the given circumstances.
The petitioner at the stage of argument challenged the saiddecision on the basis that no reasons have been given for thedecision which was conveyed to the petitioner by letter dated
250Sri Lanka Law Reports[2008] 2 Sri L.R
and therefore the decision is bad in law. The respondentsobjected to this submission as the petitioner is not entitled, at thestage of the argument, to rely on a ground which it has not pleadedin its petition. The respondent in support of this contention relied onthe judgments delivered in Abayadeera v Dr. Stanley Wijesundera,Vice-Chancellor, University of Colombo<4>; Culasubadhara vUniversity of Colombo!5); j.B. Textiles Industries Ltd. v Ministry ofFinance and Planning. The respondents further submitted that thescheme of the Act neither provides for an inquiry nor did it makeprovision for any evidence to be led in support of the objections to theassessment.
Section 141(4) provides: "The Pradeshiya Sabha shall cause tobe kept a book to be called the "Book of Objections" and cause everyobjection to an assessment or verification to be registered therein.The Pradeshiya Sabha shall cause to be given notice in writing toeach objector and the owner or occupier of the house, building, landor tenement or cultivated land of the day on which and the place andthe time at which the objections will be investigated". This sectionprovides only for an investigation of an objection to an assessment.It further provides in subsection (5). "At the time and place so fixedthe Pradeshiya Sabha shall cause to be investigated the objectionsin the presence of the objector, owner and occupier or theirauthorized agents who may be present. Such investigation may beadjourned from time to time for reasonable cause". This section doesnot even mandate the presence of the objector when his objection isinvestigated and subsection (6) provides that the decision to benotified to the objector. But the Act provides for the challenge of theassessment in the District Court under Section 142 of the said Actand in that proceedings the objector has a right to be heard and healso has a right for a reasoned decision.
The issue whether in the absence of a specific statutoryrequirement to give reasons the Commissioner has to communicatehis reasons in compliance with the principles of natural justice wasconsidered in Kusumawathie and others v Aitken Spence and Co.Ltd. and Another!7). In this case S.N. Silva, J. (as he then was) held:
"The finding that there is no requirement in law to give reasonsshould not be construed as a gateway to arbitrary decisions andorders. If a decision that is challenged is not a speaking order,
Ceylon Oxygen Ltd. v Biyagama Pradeshiya Sab'awa and others
CA(Sriskandarajah, J.)251
when notice is issued by a Court exercising judicial review,reasons to support it have to be disclosed. Rule 52 of the SCRules 1978 – is intended to afford an opportunity to therespondents for this purpose; the reasons thus disclosed formpart of the record and are in themselves subject to review. Thusif the Commissioner fails to disclose his reasons to Courtexercising judicial review, an inference may will be drawn thatthe impugned decision is ultra vires and relief granted on thisbasis".
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In Yaseen Omarv Pakistan International Airlines Corporation(0)
Bandaranayake, J. held: that the Court of Appeal erred in settingaside the impugned order on the ground that giving of reasons is sinequa non for a fair hearing. In this Judgment Bandaranayake, J.observed:
"In R v Higher Education Funding Council, ex parte Institute ofDental SurgeryO), the Queen's Bench Division had examined thedecisions in Rv Civil Service Appeal Board, ex parte Cunningham^),Doodyv Secretary of State for the Home Department11) and severalother judgments regarding the need to give reasons for the decision.In this case the respondent council, which was established bySection 131 of the Education Reform Act 1988, was responsible foradministering state funding for the provision of education andresearch by universities. By Section 131(6) the council had power tomake grants for research to universities. The council appointed apanel of academic specialists to assess and rate universities andother research institutions falling within the council's remit for thepurpose of providing funding on the basis of the quality of theresearch undertaken. In 1992 the applicant institute, a universitycollege entirely dedicated to post-graduate teaching and research indentistry, was rated 2.0 on a 5 point scale. The applicant institute hadpreviously been rated 3.0 and the lower rating was directly reflectedin a reduction in funding of approximately 270,000 sterling pounds.No reasons were given for the reduction in the applicant institute'srating and in further correspondence the chief executive of thecouncil refused to disclose the panel's reasons for the lower ratingand refused to consider any appeal against the assessment unless itwas shown that the assessment had been made on the basis oferroneous information. The applicant institute applied for judicial
252Sri Lanka Law Reports(2008] 2 Sri L.R
review of the council's decision to assess its rating as 2.0 contending,inter alia, that the council had acted unfairly in failing to give reasonsfor its decision and stating that in the absence of its reasons itsdecision was irrational.
It was held that there was no duty cast on administrative bodiesto give reasons for their decisions either on general grounds offairness or simply to enable any grounds for judicial review of adecision to be exposed. After an exhaustive examination of the legalposition relating to the 'duty to give reasons', Sedley, J. stated in asummary that-
there is no general duty to give reasons for a decision, butthere are classes of cases where there is such a duty;
one such class is where the subject-matter is an interest sohighly regarded by the law – for example personal liberty – thatfairness requires that reasons, at least for particular decisions,be given as of rights.
another such class is where the decision appears aberrant."
In this application the petitioner has not challenged the impugnedorder in the petition on the ground that no reasons were given for thesaid decision. If this ground was raised in the petition the respondentwould have had an opportunity to disclose the reasons to support thesaid decision when notice is issued by this Court. In the absence ofa specific statutory provision to give reasons the reasons need not becommunicated but if the reasons are given and if it is in the file of therelevant authority would be substantial compliance with therequirement of the duty to give reasons. The failure of the petitionerto raise this objection in the petition had deprived the respondentfrom disclosing reasons in support of his decision. Hence thepetitioner's objection which was raised first time at the stage ofargument that no reasons was given for the impugned decisioncannot be considered by this Court.
The petitioner has also challenged the seizure of the said bowseras ultra vires and illegal on the basis that section 160 of thePradeshiya Sabha Act mandates that "no property of any class ordescription set out hereunder shall be seized or sold in execution ofany warrant issued under this Act" which includes "the tools, utensils
Ceylon Oxygen Ltd. v Biyagama Pradeshiya Sabawa and others
CA(Sriskandarajah, J.)253
and implements of trade or business of such person…" The petitionercontended that the respondents have seized the petitioner'simplements of trade (a bowser containing liquid nitrogen) in totaldisregard to and contrary to the express provisions of the said Act.
The respondent contended that the words "the tools, utensils andimplements of trade or business of such person …." have been in ourstatute book long prior to being incorporated in the PradeshiyaSabhas Act. Similar words in Section 218(b) of the Civil ProcedureCode have been interpreted in William Singho v A.G.A. Mata rawthat the words "tools, utensils and implements of trade or business"are qualified by the words" as may be reasonably necessary toenable him to earn his livelihood as such". In Dr. Silva v Konamalal13)it was held that a large fishing board is not an implement of trade ofa fisherman. In view of the above interpretation the bowser seized isnot restricted from seizure under Section 160 of the said Act.
The decision in De Silva v Konamalai (supra) cannot be directlyapplied to this case as words in Section 218 of the CPC are differentfrom the words used in Section 160 of the Pradeshiya Sabha Act.
Civil Procedure Code in Section 218 when describing theproperties that are not liable to be seized, in Section 218(b) provides;"tools, utensils and implements of trade or business …. as may in theopinion of the Court be necessary to enable him to earn his livelyhood:
Section 160 of the Pradeshiya Sabha Act when describing theproperties that are not liable to be seized in Section 160(b) provides:"the tools, utensils and implements of trade or business of suchperson …. as may be reasonably necessary to enable him to earn hislively hood;
Unlike in Section 218(b) of the Civil Procedure Code, Section 159read with Section 160 of the Pradeshiya Sabha Act does not permitthe authority exercising the powers under these sections to form anopinion as to whether a particular property is reasonably necessaryto enable him to earn his livelihood.
As contended by the petitioner it is primarily engaged in thebusiness of production of industrial & medical gases and liquids,namely oxygen, nitrogen, nitrous oxide, carbon dioxide, dry ice
254Sri Lanka Law Reports(2008] 2 Sri L.R
dissolved acetylene and the petitioner has three bowsers out ofwhich two are used for the storage of liquid nitrogen whilst the otheris used for the storage of liquid oxygen and in the absence of anyother material contrary to this position, the respondent cannot cometo the conclusion that the bowser is neither a tool, utensil, orimplements of the trade or business of the petitioner nor that thebowser seized is not reasonably necessary to enable the petitionerto earn his livelihood. Hence the court holds that the bowser seizedis a restricted article under Section 160 of the said Act.
The learned Counsel for the respondent submitted that in anyevent the act of seizing the bowser cannot be quashed by Certiorarifor the reason that at the point of seizing the bowser, the revenueofficer of the Pradeshiya Sabha is not conferred with any statutorypower to come to any decision or to make a determination aboutanything. He relied on the Judgment of the Supreme Court inFernando v Nelum Gamage, Bribery Commissioned4> it was heldthat the decision of the investigating police officer to make anapplication to the Magistrate to make an order to assist the conductof a criminal investigation (including an order for the holding of anidentification parade) is not amenable to certiorari. The learnedCounsel submitted that the Court came to this conclusion because atthis stage the state did not require the investigating police officer tocome to any finding, decision or determination before making suchapplication. In reply to the submissions of the learned President'sCounsel for the petitioner that the decision to seize is a decisionamenable to judicial review and the citation of the judgment of Ft. vInland Revenue Commissioners, Exparte Ross Minister Limited'5) insupport of this contention, the learned Counsel for the Respondentcontended that in the said case the officers of the inland revenue hadexceeded the powers expressly conferred on them by Section 20(c)of the Taxes Management Act of 1970 to seize and remove duringthe search of a premises on a search warrant "anything whatsoeverfound there" which they had "reasonable cause to believe may berequired as evidence of a tax fraud" and the matter in issue in thesaid case is not the decision to seize.
The facts and circumstances of the instant case reveals that theseizure under Section 158(1)(a) of the said Act took place in terms ofa warrant dated 10.1.2005 signed by the 3rd respondent and issued
CAChandrasena alias Rale v Attorney-General255
to the 4th respondent. The 4th respondent was not given specificauthority to seize the bowser under the said warrant but he was givena general authority to seize the movable property of the petitioner.When executing the said warrant the 4th respondent had used hisdiscretion and decided to seize the bowser which contains nitrogen.This decision to seize the bowser is ultra vires to the provisions ofSection 160 of the said Act as discussed above. Hence this Courtissues a writ of certiorari quashing the decision to seize the bowserof the petitioner for non-payment of tax.
This application is allowed without costs, only in relation to theabove relief.
Writ of certiorari quashing the decision to seize the bowserfor non-payment of tax issued.
Application partly allowed.