CASE NO; 161
COMPETENCE OF THE BOARD OF SPECIAL COMMISSIONERS TO
DECIDE ALL ISSUES WHICH ARE RAISED BEFORE IT.
During proceedings before the Board, the appellant taxpayer pleaded
that the notice of refusal issued to him was null and void as it had been
wrongly addressed. The Board requested the appellant to obtain a
ruling from the normal Courts on the issue, holding that the matter did
not fall within its competence.
The Civil Court, both of first instance and in the Court of Appeal,
disagreed. The Board had full powers, as well as the duty of considering
all issues which were raised before it, be they matters of fact or law. It
was true that, in certain circumstances, matters required to be referred
to the Courts by Boards such as the Income Tax Special Commissioners,
but this should only be done as sparsely as possible. Otherwise every
point of a legal nature could be diverted away from the Board.
DECISION DATED 5th OCTOBER, 1979
CASE NO; 162
EX OFFICIO ASSESSMENTS. ONUS OF PROOF. POWERS OF THE
BOARD OF SPECIAL COMMISSIONERS.
This case concerned a small time cement ‘burdnar’. Because of the
particular structure of the way in which this group of persons worked,
from certain aspects they could be considered to be employees rather
than individual businessmen.
Estimated assessments were raised on taxpayer because it was
considered that he had not kept proper trading books. The Board of
Special Commissioners felt that this should not automatically lead to the
confirmation of the assessments, and proceeded to reconstruct the
taxpayer’s income as best as it could. The final result was not much in
excess of the declared income, and Board consequently recommended
that any additional tax chargeable should be remitted.
The Revenue, to the obvious irritation of the Court, appealed on legal
technicalities. The Court proceeded to dismantle all points raised, and
upheld the Board’s powers to take account of all facts and matters, and
not to merely stick blindly to the provisions of the law which, if rigidly
applied in this case, could have lead to a miscarriage of justice. The
Court finally repeated the Board’s recommendation that no additional tax
On the real merits of the case, the Court held that the Board’s decision
was essentially one of fact over which it had no jurisdiction.
DECISION DATED: 6 APRIL 1992
CASE No 163
TAXABILITY OF SUBVENTION PAYMENTS RECEIVED FROM
GOVERNMENT FOLLOWING NATURAL DISASTERS. POWERS OF
THE BOARD TO INCREASE ASSESSMENTS. RECORDS TO BE
KEPT. PRECISE GROUNDS OF OBJECTION TO BE FILED.
POINTS OF FACT AND LAW.
The taxpayer, a pig breeder, lost his stock and his business following the
outbreak of the African Swine Fever epidemic in the mid 1970s. With the
help of Government subventions he later re-started his business. The
real issues involved were complicated by the fact that taxpayer claimed
that his remaining trade records had been swept away by the 1979 great
storm and flooding. During the course of the appeal, the Revenue
requested an increase in the assessments to claw back certain personal
allowances wrongly given in assessment. The taxpayer, on the other
hand, asked for deductions which the Revenue opposed on the grounds
that they had not formed part of the grounds of objection that had been
The taxpayer submitted to the Court various points which, although
perhaps prima facie reasonable, were dismissed by the Court as relating
purely to matters of fact. The same conclusion was arrived at on certain
points raised by the Revenue. The Court however accepted a Revenue
request for the claw back of certain personal deductions that had been
wrongly granted: the Board appeared to have overlooked this matter in
its decision. The Court also refused to accept that accounts required to
be, even where these seemed to be reasonable, when these had not
formed part of the relevant notice of objection.
As regards subventions received, the Court ignored the interpretation
given by the Board of Special Commissioners, and adopted an exposition
given by the leading tax authority in South Africa as to which
subventions were capital in nature and not taxable, and which were of
an income character and hence taxable. The Court also held that
taxable subventions received were to be brought to charge to tax in the
years when actually received.
DECISION DATED: 13 APRIL, 1992.
CASE NO: 164
BAD DEBTS. DISCRETIONERY POWERS OF THE COMMISSIONER
OF INLAND REVENUE. DEDUCTIONS CLAIMED. PRINCIPLES
REGULATING DEDUCTIONS. CAPITAL OR INCOME DEDUCTIONS.
POINT OF FACT OR LAW. ONUS OF PROOF.
The appellant taxpayer was a company operating a shipping agency. It
claimed deductions for two specific bad debts which were disallowed by
the Revenue. Certain expenses concerning donations, subscriptions,
entertainment, commissions and foreign travelling were also disallowed.
During the appeal the Revenue requested the Board to increase the
assessments because other similar expenses had been wrongly allowed.
The Revenue invoked their discretionary powers regarding bad debts.
The Board basically ignored this point, but ruled that the debts (which it
clearly accepted to be deductible) had become bad in subsequent years.
This issue was not carried to appeal.
The principles regarding deductions were closely examined, and the
Revenue’s claims regarding their alleged capital nature were rejected.
The Court pointed out that the very stringent rules laid which seemed to
be laid down by the law had become watered down in practice over the
years. In any case, whether expenses had been incurred in the
production of the income, and whether they were of a capital nature,
were points of fact not to be easily over-ruled by the Court. The Court
also disagreed with a further Revenue point that in using certain words
in its decision, the Board was inverting the onus of proof laid down by
DECISION DATED 20 May 1992
CASE NO: 165
ESTMATED ASSESSMENTS. TRADE RECORDS TO BE KEPT.
DISCRETIONERY POWERS REGARDING ADDITIONAL TAX.
The taxpayer was a company running a small laundry business. Trade
records kept were not entirely satisfactory, and the auditors brought in
when the tax legislation regarding company financial statements was
changed, could not give a clear audit certificate for the years under
The Board nonetheless felt that the estimated assessments raised should
be reduced and, crucially, reduced the additional tax payable to an
amount which it fixed. Both parties appealed to the Court, the
Revenue particularly stressing that on matters concerning penal
additional tax, the Commissioner had discretionary powers, although
subject to the principles laid down in Case No: 57.
The Court rejected outright the appeals in so far as they concerned the
quantum of the assessments. This was a point of fact to be determined
solely by the Board, but it issued a warning that the law’s requirements
regarding trade books applied to all businesses irrespective of size. The
facts of life, however, had always to be borne in mind.
As regards the penal additional tax, the Court ruled, for the first time but
later followed in VAT appeals, that additional tax was tax like all other
taxes raised in an assessment and subject to appeal in the same way.
The Board had considered the facts of the case, and the Court was not
prepared to question its appreciation thereof.
DECISION DATED 20 May 1992
CASE NO: 166
ESTIMATED ASSESSMENTS. TRADE RECORDS TO BE KEPT.
POWERS OF THE BOARD. ONUS OF PROOF. MOTIVATION OF
THE BOARD’S DECISION.
This case concerned a restaurant owning company on which estimated
additional assessments had been raised. The Board of Special
Commissioners went thoroughly into the case and, after declaring that it
was not completely satisfied with the evidence given and the books kept,
made its own assessment on the facts before it. The Board felt that the
company’s declared income was closer to the real earnings than the
estimated assessments, and ordered a revision on figures which it
The Revenue appealed on the grounds that the Board’s decision was not
sufficiently motivated, that it tended to reverse the onus of proof laid
down by the law, and that the Board had erred at law in general. The
Court disagreed. There was sufficient motivation in the Board’s decision,
though this could perhaps have been couched in better terms. The
Court also rejected the Revenue submission that there had been a
reversal of the onus of proof. The fact that the Board was not entirely
satisfied with the appellant’s records and the evidence given on its
behalf, could not mean that it had automatically to accept what the
Revenue decided to impose by way of estimated assessments. Other
points raised by the Revenue were considered to be points of fact and not
of law. The appeal was therefore rejected.
DECISION DATED: 3 June 1992.
CASE NO: 167
“EX OFFICIO” ASSESSMENTS. POWERS OF THE BOARD OF
SPECIAL COMMISSIONERS. ONUS OF PROOF. ADDITIONAL TAX:
DISCRETIONERY POWERS OF THE COMMISSIONER.
The substantive decision of the Court in this case was closely aligned
with its decisions in cases nos 165 and 166.
This was another ‘ex offico’ (i.e. estimated) assessment where the Board
of Special Commissioners, after a detailed and comprehensive
examination of the fact, reduced the assessments substantially to figures
much closer to those declared than those assessed. The Board also
ordered the cancellation of all penal additional tax and the remission of
penalties for late filing. The Revenue appealed.
The Court rejected the appeal and did not accept the propositions put
a) since the appellant company’s trade records were not
impeccable, the estimated assessments raised could not be
amended by the Board;
b) the Board was reversing the onus of proof – namely that in
reducing the estimated assessments it was expecting the
Revenue to prove that the assessments were correct,
rather than that the taxpayer had to prove that they were
c) the Board had no power to cancel penal additional tax and fines
for late filing imposed by the Commissioner: these were taxes
raised in the assessment like all other taxes.
DECISION DATED 3 JUNE, 1992
CASE NO: 168(a)
PRELIMINARY DECISION. DEEMED DISTRIBUTION ORDERS.
WHO COULD FILE OBJECTIONS AGAINST THESE ORDERS.
This case resolved once and for all the problem as to how the process of
objection and appeal in the case of deemed distribution orders (now
largely out of use), was to be given effect to.
The Income Tax Act gave the right of appeal against these orders, but the
problem was always that the Act gave this right against assessments,
and the orders were not assessments in themselves. Consequential
assessments would then be raised on the shareholders in due course,
but the deemed orders could not be queried by the shareholders, as the
orders would have been raised on other parties. Moreover, the appeal
forms could not be readily adapted to be made use of in such cases.
The Court (and the Board before it) held that procedural imperfections in
the law could not be allowed to hinder the natural processes of objection
and appeal. The company receiving a deemed distribution order
therefore had the right of objection and appeal, and any presumed
deficiencies in the law had to be side-stepped so that these basic rights
were not impeded..
DECISION DATED 29 JULY 1988
CASE NO: 168(b)
SECOND PRELIMINARY DECISION REGARDING DEEMED
The issue in respect of which a preliminary decision had been given in
Case 168(b) was again referred to the Court on another preliminary
procedural point. The details were fairly complicated and the Court was
clearly unhappy with the delay which had been caused by wrangling over
procedure. The Court pointed out various deficiencies on the part of the
parties, but in the end it came to the conclusion that the Revenue had
not yet issued a refusal in respect of the objection against the deemed
distribution order, although this had been filed some 13 years earlier.
Somewhat reluctantly, the Court therefore ordered that the entire
proceedings in this case were to be quashed and the parties placed in the
same position that they had been before the proceedings began. The
Court emphasised that a speedy solution was necessary in the interests
of justice which had to be safeguarded in all circumstances.
N.B. It is understood that the dispute between the parties was
eventually resolved following amendments to the law.
DECISION DATED 9 OCTOBER 1992
CASES NOS: 169(a), (b) and (c)
ERROR IN FORMAT OF ‘OKKJU’. PROVISIONS RELATIVE TO
TRADE RECORDS LEADING TO ESTIMATED ASSESSMENTS AND
APPEAL BEFORE THE BOARD OF SPECIAL COMMICCIONERS.
POINT OF FACT OR LAW.
A long drawn out case, which required two preliminary decisions and
finally led the Court to express itself rather forcibly.
The first preliminary decision dealt with the point that in the appeal filed
by the Revenue from the Board’s decision, the names of the contending
parties had been erroneously switched. The Court considered this to be
a minor error and, making use of the relevant provisions of the Code of
Organisation and Civil Procedure, ordered that the necessary
amendments be effected in all the documentation.
The second preliminary decision concerned the state of taxpayer’s
records, and whether these satisfied the requirements of the law,
particularly where estimated assessments were raised and the matter
was carried to appeal before the Board. The said Board decided that the
records were sufficient to enable the taxpayer’s income and allowable
expenses to be readily ascertained. The Revenue appealed against this
ruling, pointing out that the law’s stringent requirements in this respect
did not distinguish between trade, business and profession (taxpayer was
a medical practitioner), and whether the taxpayer had a small or big
enterprise. The Court held that the important issue was whether the
taxpayer’s income and allowable expenses could be readily ascertained.
Thus, expecting a balance sheet would be incongruous in the case of a
medical practitioner exercising a sole profession. In this light the Board’s
decision that the records kept and presented were sufficient became a
matter of fact on which no appeal law. (To note that at this stage the
Board of Special Commissioners had not yet expressed itself whether it
would accept the taxpayer’s appeal regarding the assessment raised).
The third and final decision referred to the Board’s eventual full
acceptance of the taxpayer’s appeal, the cancellation of the Revenue’s
assessment and the remission of additional tax. The Revenue contended
that the Board could not so have decided, essentially on grounds which
had already been rejected in decisions delivered by the Court a few
months before the present decision. The Revenue’s appeal was rejected
in rather forcible terms by the Court.
DECISIONS DATED: 19 March 1984
31 January 1990
16 June 1993
CASES NOS: 170(a), 170(b)
TWO PRELIMINARY DECISIONS ON THE SAME CASE. REQUEST
BY THE REVENUE FOR THE CONSIGNMENT BY A WITNESS OF
A DIARY HE WAS USING IN GIVING EVIDENCE. USE OF
ENGLISH LANGUAGE IN BOARD DECISIIONS.
In the first preliminary decision, the Court confirmed a decision by the
Board of Special Commissioners that a witness could not be forced by
the Revenue to hand over a personal diary which he had used as a help
in giving evidence. Such action was held to be tantamount to granting a
privilege to one party over the other. In any case, the diary would be
available for examination when forming part of the Board’s records.
When the case again eventually returned to the Court of Appeal, it was
noticed that, because one of the appellant company’s directors was
English, the Board had used both English and Maltese in its
proceedings, and had delivered its decision in English. The Court was
asked by the parties to rule whether this was correct. As the Income Tax
laws and regulations were silent on the matter, the Court had to apply
the rules laid down in Cap 149 relating to the use of the English
language in judicial proceedings. As the company was itself registered
in Malta, and therefore “Maltese”, Board proceedings, and its decision,
should have been in Maltese. All proceedings, as well as the Board
decision, were therefore declared null and void and the case was sent
back to the Board so that the matter could be regularised.
DECISIONS DATED: 2 DECEMBER 1987
29 NOVEMBER 1993
CASE NO: 171(a)
PRELIMINARY DECISION. PR0PER REFERENCES IN ‘OKKJU’
OF CASE INSISTED UPON. PROTECTION GIVEN BY LAW IN
CASE OF CERTAIN ERRORS.
A fairly complicated case required a preliminary decision on a procedural
issue. In filing its appeal to the Court, the Revenue had referred to the
respondent only by its name while, since respondent was a limited
liability company, the appeal should have been made against the person
who had vested in him the judicial representation of the company. The
respondent company therefore pleaded that the appeal was null and
The Revenue contended that the provisions of aricle 71 of Cap 123 (the
Income Tax Act) gave sufficient protection in cases of certain errors.
The Court, while insisting that appeal cases should be properly filed,
tended to agree with the Revenue and, by making use of the powers
vested in it by art 175(2) of Cap 12, ordered the correction of the ‘okkju’
so that the real merits of the case could continue to be heard.
DECISION DATED 1 JUNE 1992
CASE NO: 171(b)
FINAL DECISION. POINTS OF FACT OR LAW. MOTIVATION OF
BOARD DECISION. WHETHER THE TAXPAYER WAS A TRADER
IN INVESTMENTS OR JUST AN INVESTOR. ENTITLEMENT TO
CARRY FORWARD OF LOSSES. ALLEGED DEAL IN A TRADE
LOSS COMPANY. APPLICATION OF THE LAW CONSISTENTLY.
In the final decision regarding this case, the Court had to examine a plea
of nullity brought by the taxpayer on the grounds that the Board had
decided only points of fact. The Revenue contended that the Board had
failed to motivate properly the decision and that, consequently, it was
being deprived of the chance of filing an appeal on points of law.
The case concerned a share trading company which had, in the past,
been taxed on profits it had made. The Revenue were now contending
that the company was not a trader in shares but a simple investor and
that, consequently, past losses granted as a deduction were due to be
clawed back, and no deduction was to be given in respect of current
The Court re-affirmed that points of law on which an appeal could be
made to the Court from a Board decision need not specifically emerge
from the decision. It was sufficient that they were implicit in it.
The Court rejected the claim that the Board’s decision was not motivated:
all the facts had been laid out after a detailed examination, and the
Board’s conclusions were likewise set out in detail. The Court held that
whether the taxpayer company carried on a trade in buying and selling
shares was a point of fact on which the Board had expressed itself clearly
in accepting the company’s contentions on this point, and that,
therefore, the losses claimed were deductible, and no appeal lay on this
issue. The Court also clearly agreed with the Board that the Revenue
should apply the law consistently, in the sense that the company could
not, in one year be taxed as a dealer when it made profits, but not be so
considered in another year when it made losses.
The Court was also asked to rule that the debts being claimed as a
deduction should not be so allowed as the company had been involved in
buying trade loss companies, which was specifically prohibited by the
Act. The Court also rejected this plea since this was yet another point of
fact on which the Board had clearly come down in favour of the taxpayer.
DECISION DATED 17 JANUARY 1994
CASE NO: 172
PEOCEDURAL ISSUES RE PLEA OF NULLITY OF ESTIMATED
ASSESSMENTS. ONUS OF PROOF.
During the course of the Board proceedings the appellant submitted,
inter alia, that the assessments were null and void as they had been
raised ‘ex officio’ without the Revenue having followed the rules laid down
by the laws in this respect.
Following a change in his legal counsel, the appellant declared that he
was keeping the plea in abeyance and asked the Board to continue with
the hearing of the case on its real merits. The Board did so and
eventually ruled against the appellant, who appealed.
The Court ruled that the Board had been wrong to proceed as it did. A
fundamental plea of nullity could not be held in abeyance. Once the
taxpayer had asked for the case to continue to be heard, he could only be
deemed to have withdrawn his plea of nullity as the two procedures were
self contradictory. The appeal was therefore rejected. The Court pointed
out that the Board had no obligation to investigate whether the Revenue
had acted ‘intra vires’ unless asked to do so by the taxpayer. The onus of
that the Revenue had so acted always remained on the taxpayer.
DECISION DATED 6 JULY 1994
CASE NO: 173
AN ENGLISH SPEAKING APPELLANT CONDUCTED HIS OWN
CASE. INVITED TO TAKE LEGAL ADVICE BUT DECLINED TO
DO SO. ASSESSMENT NOT PROVED TO BE EXCESSIVE.
The taxpayer, an English speaking person, conducted his own case
before the Board of Special Commissioners, but stated that he could
neither prove that his returns were correct, nor that the assessments
were excessive. He declined the Board’s invitation to take legal advice.
The Board thereupon declared that the taxpayer had not satisfied the
onus laid upon him of proving that the assessments were excessive, and
consequently rejected the appeal.
The Court of Appeal did likewise. The Board had done all it could to
persuade the taxpayer to tackle the matter properly, and nobody but the
appellant was to blame if his appeal had been rejected.
DECISION DATED 14 DECEMBER 1994
CASE NO: 174
SPECIAL CONCESSION CASE. BOARD’S DECISION REGARDING
EXISTENCE OF UNDECLARED CAPITAL ASSETS OVER-RULED IN
VIEW OF SERIOUS SHORTCOMINGS REGARDING
INTERPRETARION OF FACTS, LAW AND DECIDED CASES, AS
WELL AS UNWARRANTED ASSUMPTIONS MADE.
In essence this was a straight forward case as to whether, for the
purposes of the Special Concession, the appellant company had, or had
not, undeclared assets of Lm30,000 on December 1971. The Board
agreed with the Revenue that the company did have these assets on that
date, and confirmed a penal 30% assessment.
The Court disagreed and accepted all the points raised by the company
in its further appeal. The Court refused a plea by the Revenue that the
case concerned a pure point of fact: this may well have been so, but the
Board had interpreted wrongly all underlying legal provisions and
principles. It had also read into the Act’s provisions regarding the
maintenance of trade records an interpretation which the wording of the
law could in no way justify. The Board had also made various
assumptions which it was not entitled to make, and showed a certain
lack of knowledge regarding financial statements and company law.
Decided cases had been interpreted restrictively, and to the detriment of
Furthermore, the Board’s decision would have meant the taxation of the
same item twice over: first in the hands of the company, and then again
in the hands of its shareholders. The Court was not prepared to accept
that this could be possible.
DECISION DATED 12 JUNE 1995
CASE NO: 175
RIGHT TO INTERVENE IN CASE AS ‘AMICUS CURIAE’. APPEAL
FILED WRONGLY BY WAY OF PETITION INSTEAD OF ‘RIKORS’.
FACT NOT LAW.
The case concerned a company which had been struck off the Register by
order of the Commercial Court.
The lawyer appearing in the case wanted to have his right to intervene in
the case as an ”amicus curiae” recognised as such by the Board of
Special Commissioners. The Board decided that the issue was only
incidental to the case, and could be dealt with in its decision which
concerned the primary point as to whether the cased could continue to
be heard once the company had been struck off the Register.
The lawyer filed an appeal on the point to the Court, but this was
rejected on the grounds that the appeal should have been filed by way of
a ‘rikors’ not by ‘petition’, and that the issue as to whether the Board
should have recognised the lawyer as an ‘amicus curiae’ was one of fact
DECISION DATED 27 MARCH 1998
CASE NO: 176
APPEAL TO THE BOARD FILED ‘PRIMA FACIE’ ERRONEOUSLY
AS ONLY ONE COPY OF THE APPEAL WAS SUBMITTED. IN
THE PARTICULAR CIRCUMSTANCES OF THE CASE, THE
APPEAL WAS DECLARED VALID BOTH BY THE BOARD AND
The appeal to the Board was filed in only one copy, and the Revenue put
forward the plea of nullity. The taxpayer explained that the appeal was
actually drawn up by an employee of the Department and that he then
took it to the office of the Secretary to the Board. The only person who
was in the office, and who he naturally believed was the Secretary, told
him that everything was in order and accepted the appeal.
In the circumstances the Board accepted the appeal as valid and pointed
out that two copies of an appeal were required so that one could be
served on the Revenue to advise them that an appeal had been filed. In
this case, however, it was clear that the Revenue knew well that the
appeal had been filed as they had appeared before the Board to argue
their case. The Board felt that the taxpayer should not be made to suffer
in consequence of the unfortunate mix-up in the Secretary’s office.
On appeal by the Revenue, the Court agreed with the Board, and pointed
out that excessive formalism was neither favoured by the Code of
Organisation and Civil Procedure, nor by the Courts. Extensive
quotations were given from case law and the Code. It was true that early
case law on Income Tax had been rather strict in such matters, but
attitudes and practice had changed over the years, and it was now
accepted that one had to be flexible. Nullity on procedural grounds
tended to run counter to the proper functions of the tribunals, which was
that of ascertaining that justice be done.
DECISION DATED 10 JANUARY 2003
CASES NOS: 177(a), 177(b), AND 177(c)
COMPLICATED PROCEDURAL ISSUES. POWERS GRANTED TO
THE REVENUE TO CANCEL AND SUBSTITUTE ASSESSMENTS.
REVENUE MUST BE CONSISTENT IN ITS LINE OF ACTION.
CONSEQUENCES OF SHIFT IN POSITION.
To the manifest exasperation of the Court, this case, which concerned
assessments totalling just Lm127 tax, dragged on for more than 20
years, and required four decisions by the Board of Special
Commissioners and three by the Court of Appeal.
The assessments in question were originally objected to on the grounds
that at the time of their issue, as well as at the time of the issue of their
relative notice of refusal, the Office of Commissioner of Inland Revenue
was vacant. Subordinately, the appellant claimed that the children’s
allowance payable under the Social Security Act was exempt from tax.
It appears that the Revenue had sought to remedy the first ground by
cancelling and withdrawing the decision of the Commissioner of Inland
Revenue confirming the assessments, and the consequential notice of
refusal. In an unpublished decision, the Board held that the powers of
cancellation and other procedures contemplated in article 64 were
limited to assessments and did not apply to further procedures. When
the Revenue subsequently cancelled the assessments, the Board
declared that the merits of the case had been exhausted and accordingly
terminated the proceedings before it.
The Court disagreed with the Board and held that that would effectively
stultify the provisions of the said article 64. The Revenue had obviously
made a wrong decision and, when this had been declared null, it was not
open to them to try another route. The Revenue had cancelled
assessments and substituted them by others: when this procedure was
declared illegal it did not mean that the original assessments had been
automatically revived. The Revenue could not shift their position as the
case proceeded and in accordance with the way in which the wind
seemed to be blowing.
When the Board finally confirmed the assessments, it did so on the
grounds that that the taxpayer had not proved that the allowances were
exempt. The other ground of objection, namely that concerned with the
vacancy in the Office of Commissioner of Inland Revenue, seemed to have
fallen by the wayside. In any case, the Court pointed out that there were
really no assessments to be confirmed at that stage, as these had long
before been cancelled by the Revenue. The case appears to have been
definitely decided in this manner.
DECISIONS DATED : 28 MAY 1991
2 NOVEMBER 1994
8 MAY 2003
CASE NO: 178
TIME LIMIT FOR THE SERVICE OF ASSESSMENTS AFTER
THESE HAD BEEN WORKED OUT BY THE DEPARTMENT.
REVIEW OF CASE 157.
In Case no: 157, the Court had pointed out that what had been
commonly considered to be the time limit regarding assessments was
actually only the time limit for the assessments to be worked out. The
assessments could then be served on the taxpayer after this limit had
The Revenue attempted to follow the same argument in this case, where
the assessments had taken no less than four years to be served after
being worked out. By that time, the statutory eight years had elapsed.
This had presumably happened because the relative departmental
papers were missing or misplaced, but obviously this was too much both
for the Court and the Board of Special Commissioners to accept.
Drawing a distinction between the two cases on the basis as to when the
taxpayer had filed his returns, and under which articles of the law the
assessments had been raised, the Court confirmed the Board’s decision
that the assessments were statute barred. To hold otherwise would
effectively mean that there was no time limit within which an assessment
could be raised. This went against all principles of public order.
DECISION DATED 8 MAY 2003.
CASE NO: 179
DATE ON WHICH THE TAXPAYER TOOK UP RESIDENCE IN
MALTA UNDER A PERMANENT RESIDENCE PERMIT. POSSIBLE
CLASH BETWEEN IMMIGRATION AND TAX LAWS.
The taxpayer was granted as residence permit in 1994, but he
maintained that he only took up residence in Malta in 1995, and that it
was only on and after that year that he became liable to the fixed amount
of LM1,000 tax. The Revenue held that liability began when the
taxpayer was granted the residence permit in accordance with the bare
wording of the law in the articles relating to ‘new residents’.
The Board upheld the taxpayer’s plea, basing itself largely on the attitude
taken in this regards by the Immigration authorities. The Court agreed,
and quoted extensive case law to the effect that while it was an accepted
principle of legal interpretation that the wording of the law had to be
applied, it was also an accepted principle that this had to be done
sensibly, and reading the entire law as one whole.
Residence for tax purposes was defined by law, and confirmed by the
decided cases, to mean physical presence in Malta for a substantial
period. Taxpayer’s pre-1995 visits to the country had been short and of
a preparatory nature to his taking up residence. Facts showed that he
had actually taken up his permanent residence in Malta during 1995,
and his liability to tax commenced as from that basis year.
DECISION DATED 2 JUNE 2003
CASE NO: 180
VALIDITY OR OTHERWISE OF APPEAL FILED TO THE BOARD.
SPONTANEOUS DECLARATION FILED DURING THD COURSE OF
THE HEARING OF THE APPEAL.
The company filed an appeal before the Board of Special Commissioners.
The Revenue pleaded that the appeal was null and void on various
accounts. During the course of the hearing, the company filed the
relative forms under the Spontaneous Declaration of 1994. It thereupon
claimed that all pending issues had thereby been closed.
The Board rejected the appellant’s claim. If the appeal to the Board was
null and void, there was effectively nothing pending between the taxpayer
and the Revenue at the stage when the Spontaneous Declaration was
filed. The Board declared, in rather general terms, that the appeal was
null and void and that, consequently, the assessments complained of
had already become final and conclusive at the time of the claim under
the Spontaneous declaration. In the circumstances, the company’s
appeal was declared null and rejected.
The Court agreed, and elaborated further on the Board’s decision. It
examined in depth the reasons why the appeal to the Board was null and
void. The examination dealt with the various versions of the law (this
was the time when the legislation was being split between the Income
Tax Act and the Income Tax Management Act) as well as the Code of
Organisation and Civil Procedure. The Court came to the conclusion
that the Board had followed the correct procedure and that its decision
should be confirmed.
DECISION DATED 9 JUNE 2003
CASE NO: 181
EFFECT ON COURT PROCEEDINGS OF ‘SPONTANEOUS
DECLARATION’ FILED BY APPELLANT DURING THE COURSE
OF THE HEARING OF THE APPEAL.
The appellant contested the taxability of a sum of money he had received
in connection with certain services rendered. Following the issue of a
notice of refusal, an appeal was filed to the Board of Special
Commissioners which, however, confirmed the assessment.
A further appeal was made to the Court of Appeal, but during the course
of the hearing, the taxpayer participated in the Spontaneous Declaration
exercise of 1995. A zero rating assessment was issued to him, and he
consequently submitted to the Court that the merits of the case had been
exhausted and that no tax was due by him in respect of any outstanding
The Revenue objected to this approach on various grounds. These were
all swept aside by the Court as being merely legalistic, and that the
principle of ‘ius superveniens’ required that the benefits of the new
provisions of the law be granted to the taxpayer. The benefits of the
exercise could not be denied to the taxpayer on any grounds whatsoever.
NOTE: The decision in this case was delivered by the Court of Appeal in
its Higher Jurisdiction. It was however ignored by the same
Court, in its Lower Jurisdiction, in the decision delivered ten
days later in case no: 192(a).
DECISION DATED 27 JUNE 2003
CASES NOS: 182 & 183
TWO IDENTICAL DECISIONS. PROCEDURE REGARDING
APPEALS ON DEEMED DISTRIBUTION ORDERS. CASE NO
Deemed distribution orders issued by the Revenue were contested in
these cases by the relevant companies. Eventually, assessments were
issued to the shareholders. At that stage, the companies filed appeals to
the Board of Special Commissioners against the said orders.
The Revenue submitted to the Board that the appeals were null and void
because there had actually been no notices of refusal issued. The Board
accepted that the appeal was invalid, but at the same time it declared
that the orders had been issued wrongly because the relative provisions
of the Income Tax Act had not been followed, and it ordered their
The Revenue appealed, contending that the Board’s decision was
contradictory, in that it could not determine that the appeal was null and
void but, at the same time, give directives concerning the matters which
had, in the first place, given rise to the appeal. The Court agreed, but at
the same time was severely critical of the Revenue’s handling of
proceedings in this regard. Quoting its own decision in case no 168(b)
the Court confirmed the Board’s decision that the appeal before it was
null and void, but revoked the same decision where it had ordered the
cancellation of the deemed distribution orders.
DECISION DATED 10 OCTOBER 2003.
CASE NO: 184
APPEAL BY THE REVENUE FROM A BOARD DECISION WHICH
HAD CONFIRMED THE ASSESSMENTS RAISED.
In an unusual case, the Revenue (to the evident perplexity of the Court),
appealed from a Board decision which had in fact confirmed assessments
raised and in respect of which a notice of refusal had been issued (and
The Board had dealt in detail with the points raised by the taxpayer, and
had rejected the appeal. The taxpayer did not appeal to the Court
against the Board’s decision, but the Revenue did. The grounds of
appeal were set out to be that the Board had not granted the Revenue
the possibility of bringing forward their proof.
The Court rejected these grounds since, as a matter of fact, both sides
had had ample chances of putting forward their pleas. In any case, the
Revenue did not have a juridical interest in filing the appeal when the
Board had confirmed their assessments. (Note: it is nowhere explained
what were the underlying motives behind the Revenue’s appeal).
DECISION DATED 20 OCTOBER 2003
CASE NO: 185
DISTINCTION BETWEEN TIME LIMITS FOR THE WORKING OUT
OF ASSESSMENTS, AND FOR THEIR NOTIFICATION. CASE NO
178 CONFIRMED. CASE NO 157 DISTINGUISHED.
Aother case where the Revenue had worked out the assessment within
the eight years stipulated by law, but had then taken another six years to
notify the same, presumably due to difficulties in their computer system.
The Revenue, both before the Board, and before the Court, had argued,
on the strength of the Court’s decision in Case no 157, that the time limit
set out in the law referred only to the working out of the assessment, but
not to its notification. Both the Board and the Court, however, preferred
to follow the decision in Case no 178 which had pointed out that this
time limit had necessarily to apply both to the working out of the
assessment and to its notification, unless chaos and injustice to the
taxpayers were to result. The decision in Case no 157 could only apply
in particular instances and circumstances.
DECISION DATED 30 JANUARY 2004
CASE NO: 186
DEDUCTION FOR ALIMONY PAYMENTS BEFORE AN
AMENDMENT TO THE LAW. CHANGE IN LAW CANNOT BE
The taxpayer was legally separated from his wife. In the year in
question, the law required that alimony payable had to be as determined
by the Court to qualify as a deduction. The appellant submitted that
alimony agreed between the parties by contract was of the same nature,
since this had always to be submitted to the Second Hall of the Civil
Court for its approval.
Both the Board and the Court disagreed. Scrutiny and approval by the
Second Hall was not tantamount to a determination by the First Hall in
contentious Civil Cases. This was clearly what the tax law required at
that moment in time. This line of reasoning was confirmed by an
amendment to the law in subsequent years under which formal alimony
established under either method became eligible for a deduction.
The amendment could not be given retrospective application and
taxpayer’s appeal had therefore to be rejected.
DECISION DATED 27 FEBRUARY 2004
CASE No: 187
ASSESSMENTSS OSTENSIBLY RAISED ‘BEST OF JUDGEMENT’.
UNACCEPTABLE DELAY BY THE REVENUE IN DEALING WITH
CASE. UNREASONABLE DEMANDS MADE ON TAXPAYER.
CONFIRMATION OF CASE NO 174 REGARDING RETENTION OF
The taxpayer (a limited liability company) received assessments which
had ostensibly been raised to the best of the Commissioner’s judgement.
The company contended that this was clearly not the case, and the
Revenue could not show that the proper procedure for the raising of such
assessments had been followed. If anything, the records submitted to
the Board showed otherwise. The company had also submitted all
information which had been required of it before the assessments were
After several years, the Revenue proposed a compromise agreement
which was rejected by the company. Eventually, a formal notice of
refusal was issued some thirteen years after the assessments had been
raised. This procedure was unacceptable to the Board, which felt that
the compromise agreement suggested by the Revenue had in fact shown
that the original assessments had not been raised to the Commissioner’s
best of judgement at all.
An attempt by the Revenue to invoke the provisions of the law requiring
the submission of trade records on the filing of appeals against estimated
assessments, was dismissed by the Board on the strength of the Court’s
decision in Case No 174. The time limit therein fixed had long before
lapsed, and the company had proved that the records for the relative
years no longer existed.
The Court confirmed the Board’s decision on all points. The Court noted
that the Board had ample powers to decided cases which were brought
before it: this covered also whether the assessments had been validly
raised, and whether the taxpayer had proved that the assessments were
excessive. In Case no 22, the Court had endorsed the wide discretionary
powers of the Board. The Court also confirmed the principles it had set
out in Case No 174 regarding the period for which trade records had to
DECISION DATED 10 MARCH 2004.
CASE NO: 188
PAYMENT OF TAX NOT IN DISPUTE BEFORE FILING OF
APPEAL TO THE BOARD OF SPECIAL COMMISSIONERS.
PAYMENT ARRANGEMENTS WITH THE DEPARTMENT
The law requires that before a valid appeal can be made to the Board of
Special Commissioners, tax which is not in dispute for the year of
assessment must first be paid. In the current case, on the same date
that the appeal was filed, appellant company reached an arrangement
with the Revenue for payment of the undisputed tax by instalments
stretching two years into the future.
During the hearing of the case, the Revenue raised a plea that the appeal
was null and void since the undisputed tax had not been paid. This plea
was upheld by both the Board and the Court as the wording of the law
was held to be too clear to admit of any other interpretation. The
tribunals held that the arrangement for payment reached with the
Revenue could not affect the situation.
DECISION DATED 28 APRIL 2004
CASE NO: 189
RECEIPT ON REVENUE OR CAPITAL ACCOUNT. DENIAL OF
BENEFITS UNDER THE SPONTANEOUS DECLARATION.
CORRECTION OF ERROR IN NOTICE ISSUED BY THE
The appellant company owned large tracts of land on which it reared
animals for sale. Eventually, this trade tapered off and losses started
being registered. The land was therefore prepared for sale, and was sold
off in numerous transactions spread over a fairly long period. For
several years, the accounts of the company were prepared on the basis
that it was trading in land. This was later corrected, but assessments
were raised on the profits realised. The Board made a detailed review of
the circumstances of the case and upheld the assessments.
On appeal, the Court confirmed the Board’s decision on the unusual
grounds that whether a transaction was of a capital or a revenue nature
constituted a point of fact on which no appeal lay. The Court quoted,
but did not identify, precedents in this respect. On the point of taxability
or otherwise, the Court applied fairly old cases in preference to more
recent ones on the subject.
As regards the application of the Spontaneous Declaration,
notwithstanding the Court’s decision in its Higher Jurisdiction in case no
181, the Court decided that this was a point of fact on which no appeal
lay from the Board’s decision. The Court also held that the Revenue’s
decision on whether to grant the benefits of the Spontaneous Declaration
was not subject to appeal. On the Spontaneous Declaration, the Court
followed the lines set out by it in case reported at no: 192a.
The Court also rejected a plea by the taxpayer that it had been advised in
formal notices issued to it that no tax was payable for a particular year.
The Court accepted that this was a genuine typing error which stood to
be corrected in accordance with the provisions of the law.
DECISION DATED 28 APRIL 2004
CASE NO: 190
REQUIREMENT OF FILING OF RETURNS BEFORE FILING A
NOTICE OF OBJECTION. PROCEDURE ADOPTED BY THE
REVENUE HELD TO BE TANTAMOUNT TO ACCEPTANCE OF
OBJECTION AS BEING VALID DESPITE LACK OF RETURNS.
The law requires that before a notice of objection can be entered, the
respective returns have first to be filed with the Revenue.
In this case, this was not done, and during the objection stage various
demands for the submission of returns appear to have been ignored
because, according to the managing director of the appellant company,
there had been various difficulties, including personal matters.
Eventually, a formal notice of refusal was issued, pointing out, inter alia,
taxpayer’s rights of appeal.
On appeal to the Board, the Revenue submitted that there could be no
appeal, since the original objection was itself invalid. The Board held
that once the whole objection procedure had been gone through, and a
notice of refusal issued, the Revenue could not, at that stage, plead that
no objection had in fact existed. On reviewing the facts of the case, the
Board also ordered that the assessments be revised to agree with the
returns submitted. The Board, however, stated that any penalties due
for late submission were to be applied.
The Court agreed. What the Revenue should have done, if they wanted
to stick to the letter of the law, was to notify the taxpayer at the
appropriate time that his objection was invalid and that the assessments
had become definitive. They could not go through the objection
procedure contemplated by the law, but then maintain that there had
been no objection at all.
DECISION DATED 6 OCTOBER 2004
CASE NO: 191
EXPENDITURE: WHETHER OF A CAPITAL OR REVENUE
NATURE. LUMP SUM PAYMENT ON ACQUISITION OF TENANCY.
TAXABILITY IN RECIPIENT’S HANDS DOES NOT AUTOMATICALLY
LEAD TO DEDUCTION IN PAYER’S HANDS. COURT REVISES
STAND ON DISTINGUISHING BETWEEN INCOME AND CAPITAL.
In case no 189, the Court had held that whether an item was to be dealt
with on Revenue or Capital account was a point of fact on which no
appeal lay. In this case, the Court made a substantial withdrawal from
this position. It proceeded to consider the point at issue and in fact
reversed the Board’s decision. The Court, however, saw fit to cast doubts
on the usefulness of referring to U.K. precedents, on the ground that the
laws were not identical. This notwithstanding, the Court proceeded to do
so itself, both directly and indirectly, through reference to local cases
which were themselves based on U.K. precedents.
The case concerned a lump sum paid on the acquisition of the tenancy of
a shop. This payment was in addition to the first year’s rent. The
taxpayer claimed that this was just like normal rent and that,
consequently, it should be allowed as a deduction. The more so as the
amount in question was clearly taxable in the recipient’s hands. The
Board agreed and allowed the deduction. The Revenue appealed.
In addition to the above considerations, the Court noted that a once and
for all payment was usually of a capital nature. The payment made in
this case was clearly preparatory to the commencement of business and
it could not be said to have been incurred in the production of the
income. The necessary link between expenditure and income was
therefore not present. The Court furthermore declared unequivocally,
also quoting past cases, that the fact that the amount in question was
probably chargeable in the recipient’s hands in accordance with the
provisions of the law could not be accepted as a valid reason for its
The Revenue’s appeal was therefore upheld.
DECISION DATED 6 OCTOBER 2004
CASE NO; 192(a)
COURT OVERRULES ITS OWN DECISION IN CASE NO 181
REGARDING OVERRIDING EFFECT OF SPONTANEOUS
DECLARATION. COURT ALSO DISCARDS ACCEPTED
DISTINCTION BETWEEN NEW REASONS BROUGHT FORWARD IN
SUPPORT OF, AND NEW GROUNDS OF OBJECTION.
In this preliminary decision, the Court, acting in its Inferior Jurisdiction,
contradicted what the same Court, acting in its Higher Jurisdiction, had
decided just ten days before in Case No: 181. This was to the effect that
the Spontaneous Declaration legislation constituted ‘jus superveniens’
and that it was not legitimate to deprive the taxpayer of the benefits of
this concession granted by Government.
The Court in this case, on the other hand, accepted the Revenue’s plea
that it had discretionary powers whether to grant the said benefits or
The Court also accepted the plea that invoking the Spontaneous
Declaration after the appeal procedures had already began was effectively
putting in a fresh ground of objection. This again went against the
decision in Case No: 181, and contradicted several decided cases to the
effect that new reasons brought forward did not constitute fresh grounds
DECISION DATED 7 JULY 2003.
TAXABILITY OF BONUS SHARES DISTRIBUTED OUT OF TAX
FREE PROFITS. POSSIBLE TAX AVOIDANCE SCHEME.
ECONOMIC, BANKING AND ACCOUNTING PRIONCIPLES
In a long drawn out case concerning benefits available under the Aids to
Industries Ordinance of 1959, the Board of Special Commissioners was
required to decide whether bonus shares distributed out of profits made
during a tax holiday period should be brought to charge to tax in the
recipient’s hands. Overall, the distributing company had made losses
during the tax holiday period, but it claimed that it was entitled to
distribute tax free the bonus shares out of profits made in a particular
The Board did not accept any of the reasons brought forward by the
Revenue as to why these shares should be brought to charge to tax.
However, by specious arguments of a banking, economic and accounting
nature (possibly all of dubious applicability), decided that the Revenue
were right in bringing the bonus shares to charge.
The Court followed the Board’s line, and added various other
considerations such as that the company in question was not entitled to
make distributions in the way in which it had done (not in the legal
sense, because the Board’s arguments on the legality of the transaction
were accepted). It also added that this was a tax saving device, but failed
to indicate how this was to happen. The Court also stated that it had
found no major legal errors in the Board’s argumentation.
DECISION DATED 20 OCTOBER 2004.
CASE NO: 193
ADDITIONAL ASSESSMENTS. TIME LIMITS. ADDITIONAL
GROUNDS OF OBJECTION.
The appellant in this case was obviously a recalcitrant taxpayer and a
difficult person to deal with. Instead of addressing the real merits of his
appeal, he restricted himself to raising procedural points regarding
assessments and additional assessments raised upon him.
The present appeal concerned additional assessments which taxpayer
claimed were statute barred, having been raised after the statutory time
limit. This claim was rejected on the ground that the plea, having been
raised for the first time before the tribunals, constituted fresh grounds of
objection. A proviso to a paragraph in the Legal Notice regulating
appeals to the Board seems to have been raised in status to over-ride the
provisions of the law and decisions delivered by the Court in its Higher
The taxpayer’s claim was also refused on the grounds that the Board had
sufficient reasons to conclude that there had been wilful negligence or
fraud, in which case the law itself swept aside all statute barring for the
raising of assessments.
DECISION DATED 20 OCTOBER 2004
CASE NO: 194
INTERPLAY BETWEEN PROVISIONS REGARDING THE
SUBMISSION OF TRADE RECORDS ON THE FILING OF APPEALS
TO THE BOARD OF SPECIAL COMMISSIONERS AND THE
PROVISIONS OF THE SPONTANEOUS DECLARATION.
In a long and complicated case, the taxpayer, a limited company,
appealed to the Board against estimated assessments. Trade records
were not submitted to the Revenue within the time limit provided for in
such cases, and the Revenue put forward the plea that the Board must
consequently automatically dismiss the appeal. When the case came up
for hearing, the appellant requested a deferment as it was going to make
an application under the Spontaneous Declaration scheme. The Board
granted the deferment, and the application was filed accordingly.
On the recall of the case, the Board, whose composition had in the
meantime been changed, decided to uphold the Revenue’s plea that the
appeal had to be summarily dismissed and that, therefore, the
assessment had become final and conclusive before the Spontaneous
Declaration had been filed. Consequently, the appellant could not
benefit from the scheme. The Court agreed with the Board. Effectively,
the Board as first composed should have decided the plea of nullity
straightaway and not suspended the case so that the appellant could file
the Spontaneous Declaration.
DECISION DATED 20 DECEMBER 2004
CASE NO: 195
TRANSACTIONS IN SHARES. WHETHER ON CAPITAL OR
REVENUE ACCOUNT. BADGES OF TRADE.
Appellant purchased from his father a large block of shares. The
purchase was effected on credit. Other purchases of shares were also
made. Over a period of five years, several shares were sold, including
shares to the managing director of the company. This sale was made on
condition that the shares would be re-acquired by the appellant should
the general manager terminate his appointment before a certain date.
The general manager had similar arrangements with the other
shareholders. Finally, appellant sold his remaining shares in the
company (some 80% of his holding) to a family company over which he
had 25% control. Appellant contended that the sales were all on capital
account and that the substantial profits made should be exempt from
tax. This argument was rejected by the Board of Special Commissioners
on the grounds that the circumstances showed that, whatever may have
been the original intention on purchase of the shares, circumstances as
they evolved indicated that a trade had been brought into existence.
The Court agreed. The tribunals preferred to look at the matter
objectively rather than purely from a subjective personal point of view
concerning appellant’s intentions..
Essentially, though some irrelevant arguments may have slipped into the
tribunals’ reasoning, they applied the classic tests regarding the badges
DECISION DATED 26 JANUARY 2005
CASE NO: 196
CAPITAL GAINS TAX ON SALE OF PROPERTY ACQUIRED
THROUGH A DONATION THAT WAS LATER AGGREGATED TO
THE ESTATE OF THE DONOR ON HER DEATH FOR DEATH
DUTY PURPOSES. PRINCIPLES OF LEGAL INTERPRETATION.
Appellant taxpayer sold property which, at the time of sale, would have
been exempt from tax if inherited, but not if acquired by way of donation.
The property had been donated to her by her mother, but as the latter
died less than 10 years after making the donation, this was aggregated to
her estate for death duty purposes in accordance with the provisions of
the Death and Donation Duty Act, and subject to death duty accordingly.
Taxpayer argued that for tax purposes the property was consequently to
be considered to have come to her causa mortis, and therefore the profit
made on sale was exempt. The argument was particularly based on the
fact that death duty, donations, income tax and capital gains tax all fell
within the competence of the Inland Revenue Department.
The tribunals disagreed and rejected the claim. Aggregation was clearly
set out to be only for the purposes of the DDTA, and no repercussions
were to be read into the CGT legislation. The two were different laws and
went their own ways. The Court made a review of the principles of legal
interpretation, particularly on tax matters, but failed to note that
essentially the same principle had been decided accordingly in Case No:
DECISION DATED 26 JANUARY 2005.
CASE No: 197
PROCEDURAL ISSUES REGARDING RETURNS, ASSESSMENTS,
REFUSALS AND OBJECTIONS. COURT OVERRIDES BOARD ON
ITS INTERPRETATION OF DEPARTMENTAL FORMS. POINTS OF
FACT AND LAW. MOTIVATION OF BOARD’ DECISION.
The appellant appears to have been tardy in its presentation of returns
and accounts, and claimed that certain communications had not been
received by it from the Department.
The Board decided that the notices of refusal issued to taxpayer in fact
amounted to a cancellation of the assessments on which there had been
an objection, and their reissue. It therefore held that there were no
contested assessments before it. The Revenue appealed, stating amongst
other grounds, that the Board’s decision was not motivated. The Court
disagreed on this point, stating that the Board’s decision was just
sufficient in this regards. It was also well within the limits of the
principle of ‘audi alteram partem’.
The Court, however, disagreed with the Board regarding the
interpretation of the computerised Departmental forms. The way in
which these were set out clearly reflected technical requirements, and
there was no question of cancellation of assessments and their re-issue.
The Court also disagreed with taxpayer’s plea that this matter was a
question of fact on which no appeal lay.
The case was consequently referred back to the Board for continuation of
DECISION DATED 26 JANUARY 2005
CASE NO: 198
PROCEDURAL ISSUES REGARDING FILING OF RETURNS, ISSUE
OF ASSESSMENTS, FILING OF OBJECTIONS. VALIDITY OF
PROCEDURES. DUTY OF COMMISSIONER TO CONSIDER
MATTERS CAREFULLY BEFORE ISSUE OF ESTIMATED
Another case of an obviously recalcitrant taxpayer who failed to file
returns for several years, despite being repeatedly requested to do so.
The returns were eventually filed, possibly beyond the time limit for the
filing of objections, which, in any case, were themselves filed late.
The Revenue cancelled some of the assessments raised, while the Board
declared that the appeal in respect of the others was invalid. The Court
disagreed with the Board regarding the invalidity issue, but noted that
the Board had given sufficient reasons why the appeal should in fact be
rejected on its merits.
The Court quoted an old case which concerned the restricted duties
imposed upon the Revenue of considering matters at the objection stage,
but it extended the principle to estimated assessments. This seems to
have reversed a whole series of cases delivered by the Court in its Higher
Jurisdiction regarding procedures to be followed in the raising of
estimated best of judgement or ‘ex officio’ assessments.
The taxpayer’s appeal was rejected.
DECISION DATED 26 JANUARY 2005
CASE NO: 199
RETROSPECTIVE APPLICATION OF AMENDING LEGISLATION.
This important case concerned the applicability of amending legislation
carried during 2004, but with effect from November 2003. The
amendment sought to recoup, in certain circumstances, assessments
which would otherwise be statute barred following Court decisions to the
effect that the eight years’ time limit in the law applied not only to the
working out of the assessments, but also, in normal cases, to their
In the present case, the Board of Special Commissioners refused to
concede that the new amendment applied. They pointed out that it
simply was not just and fair to deliver an assessment some 10 years after
the return had been submitted. They quoted (perhaps wrongly) U.K.
texts to the effect that Income Tax was a tax which by its very nature was
re-imposed yearly, and that such delays could be tantamount to a breach
of human rights. In the opinion of the Board, the new amendments
concerned future assessments.
The Court followed the same lines. It argued that amendments to the
law could not affect matters which had already become definitive. In this
case, the assessment had already become statute barred and could not
be affected by the new law. Moreover, the period during which the new
law was to operate could only mean that it was to apply to assessments
that, on its enactment had not yet become final and conclusive (because
they had not yet been raised).
The Court made reference to principles emerging from Italian texts as
applied in Malta. It also made reference to its own recent VAT decisions
on the matter, but did not mention various Income Tax cases already
decided on this point, including cases nos 19, 23, 124(b) and 134.
DECISION DATED 23 FEBRUARY 2005
CASE NO: 200
ESTIMATED ASSESSMENTS. COURT FINDS NO FAULT WITH
APPROACH TO THE CASE ADOPTED BY THE REVENUE AND
THE BOARD OF SPECIAL COMMISSIONERS. POWERS OF BOTH.
The taxpayer ran a grocery shop in a small village. Profits were assessed
at what seemed to be high amounts. The taxpayer, however, both at the
assessment and the objection stage, appears to have been rather
wayward and lethargic in providing the necessary information and
During the appeal, the Board suggested that the case be referred back to
the Revenue, but this was refused by the Revenue representative. The
Board did not seem to insist, and proceeded to confirm the assessments
on the grounds that they had not been proved to be excessive. The
Board did, however, make a slight reduction.
The Court pointed out taxpayer’s various shortcomings, and stated that
the Board could not be expected to condone his attitude. As both the
Revenue and the Board had acted within the law, the appeal had to be
DECISION DATED 23 FEBRUARY 2005