| 29/8/2008 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 48 |
Decided on 23 May 1962 |
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Right To A Refund Of Tax Paid In Accordance With A Return That Had Been Erroneously Prepared
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The taxpayer reported as income certain receipts from a shipping business that were admittedly non taxable. The assessments had been raised accordingly and the tax paid. Since the assessments had been raised in accordance with the return submitted, no objection had been filed within the time limit for so doing.
Some years later the taxpayer became aware of his error, and claimed a refund of the tax that had been overpaid. The claim for refund was filed within the statutory period for so doing. The Commissioner refused to accept the claim on the grounds that the proper procedure should have been the filing of a notice of objection within the statutory time limit. Before the Board of Special Commissioners, the Revenue argued that, where a notice of objection should have been filed, the taxpayer could not ignore the relative procedure and then file a claim for refund at his leisure. The Board, however, held that the Revenue's practice was too restrictive. The department was only admitting claims for refund where
- tax had been overpaid by deduction at source, and
- events subsequent to the raising of assessments reduced the actual liability
The Board was of the opinion that, unless the matter had already been closed under appeal, where tax is overpaid due to a genuine error, such as the filing of a wrong return, it made no sense to deny the right of a refund that was granted in ample terms by the law itself.
The Court of Appeal agreed with the Board. The restriction sought to be made by the Revenue to the right for a refund did not appear to be justified by the law, which in fact made certain specific restrictions. These included cases when the taxpayer had not filed a return, and where assessments had been raised in excess of the declared amount. The Court emphasized that it made no sense to expect that the taxpayer should have filed a notice of objection when in fact the assessments had been raised on the declared income. The Court also pointed out that the provisions of the law relative to assessments becoming final and conclusive contained a proviso to the effect that these provisions would not impede the granting of refunds.
Both the Board and the Court made reference to foreign case law and text books in support of their decisions.
BSC Case No: 10/61
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