VALLIBEL LANKA (PVT) LIMITED v. DIRECTOR -GENERAL OF CUSTOMS AND THREE OTH

021-SLLR-SLLR-2008-V-1-VALLIBEL-LANKA-PVT-LIMITED-v.-DIRECTOR-GENERAL-OF-CUSTOMS-AND-THREE-OTH.pdf


SQ Vallibel Lanka (Pvt.) Limited v Director-General of Customs 219
and three others
VALLIBEL LANKA (PVT) LIMITEDv
DIRECTOR-GENERAL OF CUSTOMS AND THREE OTHERSSUPREME COURTSARATH N. SILVA, C.J.
AMARATUNGA, J. ANDK. SRIPAVAN, J.
S.C. APPEAL 26/200829 AUGUST, 2008
Customs Ordinance – Forfeiture of a vessel under sections 47 and 107 for non-payment of GST and NSL.
The petitioner sought a Writ of Certiorari in the Court of Appeal to quash the orderof the 3rd respondent that the petitioner was liable to pay GST and NSL on thepurchase price of the vessel named "MV Induruwa Valley". The Court of Appealdismissed the petitioner's writ application. The Supreme Court granted SpecialLeave to Appeal and leave was granted to the petitioner on the following questions:
Did the Court of Appeal fall into substantial error by holding that the vessel"M.V. Induruwa Valley" had been imported into Sri Lanka and that theprovisions of the Customs Ordinance pertaining to recovery and sanctionscould be legitimately invoked in the case of an alleged default in paymentof Goods and Services Tax and National Security Levy?
Did the Court of Appeal err by failing to consider that unlike in the case ofcertain other specific fiscal statues, that in the case of Goods and ServicesAct No. 34 of 1996 as amended by Act No. 11 of 1998, it is only the charginglevying and collection of GST that can be made as if it were a customs duty,whilst recovery of tax in default on the other hand is purely within thejurisdiction of the Commissioner-General of Inland Revenue?
220Sri Lanka Law Reports[2008] 1 Sri L.R
Did the Court of Appeal fall into substantial error in law by classifying ashipA/essel as being a “good0 in terms of the Customs Ordinance and alsoby holding that such a shipA/essel could be imported within the meaning ofthe provisions of the Customs Ordinance?
Did the Court of Appeal err in law when holding that the petitioner had failedto declare the vessel to the customs on arrival and had consequently failedto pay GST and NSL at the time when there was no such requirement in law?
Held:
In terms of section 16 of the Customs Ordinance the precise time at whichimportation of any goods shall be deemed to be the time at which shipimporting such goods had actually come within the limits of the port.
A vessel arriving in the ordinary course of navigation carrying goods onboard does not fall within the definition of an "imported good" in terms ofsection 16 read with section 47.
Per Sripavan, J.
"I am unable to find any provision in the Customs Ordinance which contemplates ormakes provisions for a sailing vessel as being a "good" within the meaning ofsection 16 of the Customs Ordinance."
The Court cannot give a wider interpretation to Section 16, merely becausesome financial loss may in certain circumstances be caused to the State.Considerations of hardships, injustice or anomalies do not play an usefulrole in construing fiscal statues. One must have regard to the strict letter ofthe law and cannot import provisions in the Customs Ordinance so as tosupply any assumed deficiency.
When the GST Act makes general provisions in respect of certain mattersand makes specific provision with respect to "recovery" the latter mustprevail over the general. The special jurisdiction with regard to "recovery"must be exercised by the Commissioner General of Inland Revenue andnot by the Director General of Customs.
When an administrative body exercises the power, it shall not act mala-fideor frivolously or vexatiously but shall act in good faith and for theachievement of the objects the enactment had in view.
It is the established rule in the interpretation of statues that levy taxes andduties, not to extend the provisions of the statute by implication, beyond theclear import of the language used or to enlarge their operation in order toembrace matters not specifically pointed out.
In case of doubt, the provisions are construed most strongly against the State
and in favour of the citizen.
The intention to impose duties and/or taxes on imported goods must beshown by clear and unambiguous language and cannot be inferred byambiguous words.
qq Vallibel Lanka (Pvt.) Limited v Director-General of Customs 221
and three others (K. Sripavan, J.)
The defence Levy Act No. 52 of 1991 as amended by Act No. 25 of 1994in Section 5A(2) makes clear provision that the Defence Levy be deemedto be customs duty payable under the Customs Ordinance and theprovisions of Customs Ordinance shall apply to the collection and recoveryof any such amount. Accordingly, the 3rd respondent has the power torecover Defence Levy, if any under the provisions of the CustomsOrdinance without forfeiting the vessel.
Per Sripavan
"In carrying out its task of enforcing the law, the Court has to insist on powers beingexercised truly for the purpose indicated by the Parliament and not for any ulteriorpurpose."
APPEAL from the judgment of the Court of Appeal.
Sanjeewa Jayawardena with R. Amarasooriya for the petitioner.
Mrs. F. Jameel, D.S.G. for the respondents.
Cur.adv.vult
August 27, 2008SRIPAVAN, J.
The petitioner is a company duly incorporated under the laws of SriLanka and engaged in the business of, inter-alia, international andnational transportation by sea. The petitioner purchased a sea-goingvessel from Japan and brought same into the Sri Lankan territorialwaters in or around April 1999. The vessel was registered under the SriLankan flag and named “MV Induruwa Valley1'. The respondents did notdispute that the said vessel is engaged in transporting essential cargoto the Northern Province. The petitioner alleges that on or around 2ndMarch 2001, officers of the Department of Customs acting in terms ofan authority given under Section 128 of the Customs Ordinance (P4)entered the premises of the petitioner on the basis that there wereuncustomed goods and/or goods the importation of which wererestricted under Schedule "B“ of the Customs Ordinance. TheExecutive Director of the petitioner was thereafter summoned for aninquiry before the third respondent on 4th April 2001 and 24th May 2001as evidenced by the documents marked P5 and P6 respectively. Afterthe conclusion of the inquiry the third respondent made the followingimpugned order.
"I have considered the evidence and the documentsproduced before me and also the verbal submission made byMr. S.N. Godwin, Executive Director, IWs. Vallibel Lanka (Pvt)
222Sri Lanka Law Reports[2008] 1 Sri L.R
Ltd. today on behalf of M/s. Vallibel Lanka (Pvt) Ltd. Since, ithas been proved that the GST nd the NSL has not been paid,
I consider that the vessel is liable for forfeiture under Sections47 and 107 of the Customs Ordinance (Chapter 235).However due to the reason, that the vessel is carryingessential cargo to to the North I release the vessel on amitigated penalty of Rs. 7.5 Million (Rs. 7,500,000.00) underSections 129, 163 and 47 of the Customs Ordinance."
The petitioner sought a writ of certiorari in the Court of Appeal toquash the said order of the third respondent that the petitioner wasliable to pay GST and NSL on the purchase price of the said vessel. Thewrit application was dismissed by the Court of Appeal on 2nd November2007. Being aggrieved with the judgment of the Court of Appeal markedP15, the petitioner sought special leave to appeal and leave wasgranted mainly on the following questions.
Did the Court of Appeal fall into substantial error by holding that thevessel "MV Induruwa Valley" had been imported into Sri Lanka andthat the provisions of the Customs Ordinance pertaining to recoveryand sanctions could be legitimately invoked in the case of an allegeddefault in payment of Goods and Services Tax and National SecurityLevy?
Did the Court of Appeal err by failing to consider that unlike in thecase of certain other specific fiscal statutes, that in the case ofGoods and Services Act No. 34 of 1996 as amended by Act No. 11of 1988, it is only the charging levying and collection of GST that canbe made as if it were a customs duty, whilst recover/ of tax in defaulton the other hand is purely within the jurisdiction of theCommissioner General of Inland Revenue?
Did the Court of Appeal fall into substantial error in law by classifying
a ship/vessel as being a "good" in terms of the Customs Ordinanceand also by holding that such a ship/vessel could be imported withinthe meaning of the provisions of the Customs Ordinance?
Did the Court of Appeal err in Law when holding that the petitionerhad failed to declare the vessel to the customs on arrival and hadconsequently failed to pay GST and NSL at the time when there wasno such requirement in law?
The first respondent in paragraphs 9 & 11 of the affidavit dated 15thOctober 2001 filed in the Court of Appeal states that the importation of
SC Vallibel Lanka (Pvt.) Limited v Director-General of Customs 223
and three others (K. Sripavan, J.)
the said vessel took place as contemplated in Section 16 of theCustoms Ordinance when it was brought into the Sri Lankan territorialwaters and the failure to declare same was an offense under section 47.The court therefore has to examine section 16 of the CustomsOrdinance in order to ascertain the time and mode of importation of thesaid vessel into the limits of the port. In terms of the said section theprecise time at which importation of any goods shall be deemed to bethe time at which the ship importing such goods had actually comewithin the limits of the port, (emphasis added). The pleadings do notshow the time at which the ship importing "MV Induruwa Valley" hadactually come within the limits of the port. I am unable to find anyprovision in the Customs Ordinance which contemplates or makesprovision for a sailing vessel as being a "good" with the meaning ofsection 16. The provision relied on by the third respondent, namely,section 47 of the Customs Ordinance obligates an importer to deliver abill of entry in respect of "goods" imported in a ship, section 107 toospeaks of goods, packages or parcels taken or passed out of any ship.In carrying out its task of enforcing the law, the court has to insist onpowers being exercised truly for the purpose indicated by Parliament andnot for any ulterior purpose. The court is solicitous that when anadministrative body exercises the power, it shall not act mala-fide orfrivolously or vexatiously but shall act in good faith and for theachievement of the objects the enactment had in view. I am thereforeunable to hold that a vessel arriving in the ordinary course of navigationcarrying goods on board falls within the definition of an "imported good"in terms of section 16 read with section 47.
It is the established rule in the interpretation of statutes levying taxesand duties, not to extend the provisions of the statute by implication,beyond the clear import of the language used or to enlarge theiroperation in order to embrace matters not specifically pointed out. Incase of doubt, the provisions are construed most strongly against thestate and in favour of the citizen. Thus, the intention to impose dutiesand/or taxes on imported goods must be shown by clear andunambiguous language and cannot be inferred by ambiguous words.The court cannot give a wider interpretation to section 16 as claimed bythe learned DSG merely because some financial loss may in certaincircumstances be caused to the state. Considerations of hardship,injustice or anomalies do not play any useful role in construing fiscalstatutes. One must have regard to the strict letter of the law and cannot
224Sri Lanka Law Reports[2008] 1 Sri L.R
import provisions in the Customs Ordinance so as to supply anyassumed deficiency. For the foregoing reasons too, I hold the vessel inquestion was not "imported" into Sri Lanka within the meaning of theCustoms Ordinance.
Learned DSG strenuously contended that the GST Act as amendedby Act No. 26 of 2000 draws a clear distinction between imported goodsand other goods and puts the imported goods directly in a differentcategory and vests the administration of the said Act on imported goodsin the Director General of Customs. It is on this basis counsel arguedthat the intention of the legislature was that the GST on imported goodsbe brought under the regime of the Customs Ordinance. In view of thefindings that "MV Induruwa Valley" was not imported into Sri Lanka, theapplication of Act No. 26 of 2000 does not arise. In any event, it is notedthat in terms of the said Act, the charging, levying and collection of GSTcould be made as if it were a Customs duty whilst the recovery of tax indefault on the other hand is vested with the Commissioner General ofInland Revenue by virtue of sections 39 to 49 in Chapter VIII of the GSTAct No. 34 of 1996 as amended. Thus, when the GST Act makesgeneral provisions in respect of certain matters and makes specificprovision with respect to "recovery" the latter must prevail over thegeneral. The special jurisdiction with regard to "Recovery" musttherefore be exercised by the Commissioner General of InlandRevenue and not by the Director General of Customs.
The Defence Levy Act No. 52 of 1991 as amended by Act No. 25 of1994 in section 5A (2) makes clear provision that the Defence Levy bedeemed to be customs duty payable under the Customs Ordinance andthe provisions of Customs Ordinance shall apply to the collectionand recovery of any such amount (emphasis added). Therefore thethird respondent has the power to recover Defence Levy, If any, underthe provisions of the Customs Ordinance without forfeiting the vessel.
For the reasons set out above, the order of the Court of Appeal dated2nd November 2007 marked P15 is set aside and a writ of certiorari isissued quashing the order made by the third respondent on 24th May2001 in Customs case No. PCAB/2001/19 marked P7 and the letterdated 18th June 2001 marked P9 containing the communication of thesaid order to the Chairman/Managing Director of the petitioner company.
I make no order as to costs.
SARATH N. SILVA C.J. -I agree.
AMARATUNGA, J.I agree.