clr/1966/1966_3_431.pdf

(2)of the Taxes (Quantifying and Recovery) Law, 1963(Law No. 53 of 1963)for payment by the tax-payer of income tax onthe undisputed part of his taxable income—Such demand is an executory act, and not a mere act of execution—Therefore, it canbemade the subject of a recourse under Article 146of the Constitution—The phrase "Not in dispute" in the said proviso to section 31

(2)—Meaning—It means "not in dispute by way of objection or recourse, as the case may be". Administrative Law—Recourse under Article 146 of the Constitution—Not entertainable when the acts complained ofare mere acts of execution as distinct from executory acts—Demands by the Director of Inland Revenue under the proviso to section 31

(2)of Law No. 53 of 1963 (supra)—They are executory acts—Because they involve thereversal against the tax-payer of the legal situation created in his favour by the main part of that subsection

(2)—See, also, under Income Tax, above. In this case the applicant complains against demands made onthe8thJanuary, 1965,bytherespondent Director of Inland Revenue, requiring him to pay by the 30th January, 1965,the income tax due on the alleged undisputed part of his taxable income in respect of the years of assessment 1952-

1. Subsequently the disputed demands were restricted to the years of assessment
2. It is common ground that the sub-judice demands of the 8th January, 1965,were made after recourse No. 431 1966 Mar.17 April30 THEOPHILACTOS MAVROMATIS (No. 2) and THE REPUBLIC OF CYPRUS THROUGH
3. THE DIRECTOR OF INLAND REVENUE
4. THE MINISTRY OF FINANCE 1966 Mar. 17 April 30 THEOPHILACTOS MAVROMATIS (No. 2) and THE REPUBLIC OF CYPRUS THROUGH
5. THE DIRECTOR OF INLAND REVENUE
6. THE MINISTRY OF FINANCE 129/64 h a d been filed b y applicant o n t h e 2nd November, 1964, against the assessments for the years of assessment concerned. D u r i n g the hearing of this case counsel for the respondent took the preliminary objection that the present recourse cannot be entertained u n d e r Article 146 of the Constitution, because t h e aforesaid demands are only acts of execution and not executory acts. Section 31

(2)of t h e Taxes (Quantifying and Recovery) Law, 1963 (Law N o . 53 of 1963) provides: "

(2)Collection of tax shall in cases where notice of an objection has been given, or a recourse made to the S u p r e m e Constitutional Court, (now to t h e S u p r e m e Court)—remain in abeyance until such objection or r e c o u r s e is determined; "Provided that the Director may in any such case enforce payment of any portion of the tax which is not disputed". Held,

(1)as to the preliminary or not this recourse is entertainable: objection whether (a) I n my view, action taken by the Director under t h e proviso to sub-section

(2)(supra) is of an executory n a t u r e , a n d not a mere act of execution, because it involves t h e reversal against the tax-payer of the legal situation created in his favour by t h e main part of the aforesaid sub-section

(2)(supra); and this takes place not automatically, b u t after t h e exercise of a discretion by t h e Director in t h e particular circumstances of each specific case. (b) Therefore the preliminary objection taken counsel for the respondent, as above, fails. by

(2)As to the substance of the case: (a) T h e expression " n o t in d i s p u t e " in the proviso to sub-section

(2)of section 31 of Law N o . 53 of 1963 (supra) means " n o t in d i s p u t e " by way of objection or recourse as the case may be. (

1. b)Looking at the application in t h e recourse N o . 129/64 filed in N o v e m b e r 1964, (supra), there can b e no d o u b t that the tax claimed u n d e r the assessments in respect of the years of assessment 1952-1955 was—on 432 certain grounds relied upon by the applicant in such recourse—in dispute to the whole extent of such assessments. (
2. c)Therefore the prerequisites of resort totheproviso to section 31

(2)(supra) were not satisfied. (d) Intheresult such demands whichweremadebythe Director under the aforesaid proviso are contrary to law and have to be annulled. Sub-judice demands of the Director ofInlandRevenue declared null and void. Orderfor costs infavourof the applicants. Recourse. Recourse against demands made by Respondent 1, the Director of Inland Revenue, requiring applicant to pay by the 30th January, 1965,the income tax due by him on the undisputed part of histaxable income in respect of the years of assessment 1952-

1. M. Houry with St. G.McBride, for theApplicant. L. Loucaides, Counsel of the Republic, with Chr. Paschalides,for the Respondent. Cur.adv.vult. The following judgment was delivered by:— TRIANTAFYLLIDES, J.: In this case the Applicant complains against demands made by the Respondent Director of Inland Revenue, requiring himtopaybythe30th January, 1965, the income tax due on the undisputed part of his taxable income in respect of the years of assessment 1952-
2. Such demands were allmade inwriting onthe8th January' 1965, and they are exhibits 4-12in these proceedings. During the hearing of this Case counsel for Respondents took thepreliminary objection that this recourse could notbe entertained under Article 146 because the said demands are only acts of execution and not executory acts. It is, therefore, necessary to deal with this issue, first:— The Director of Inland Revenue has acted in this Case 433 1966 Mar.17 April30 THEOPHILACTOS MAVROMATIS (No.2) and THE REPUBLIC OF CYPRUS THROUGH
3. T H E DIRECTOR OF INI AND REVENUE
4. T H E MINISTRY OF FINANCE 1966 Mar. 17 April 30 THEOPHILACTOS MAVROMATIS (No. 2) ^-and THE REPUBLIC OF CYPRUS THROUGH
5. THE DIRECTOR OF INLAND REVENUE
6. THE MINISTRY OF FINANCE under the proviso to subsection

(2)of section 31 of the Taxes (Quantifying and Recovery) Law, 1963 (Law 53/63) which reads as follows:— "

(2)Collection of tax shall in caseswhere notice of an objection has been given, or a recourse made to the Supreme Constitutional Court, remain in abeyance until such objection or recourse is determined: Provided that the Director may in any such case enforce payment of any portion of the tax which is not in dispute". So, though ordinarily, on the basis of the general principles of Administrative Law, the mere filing of a recourse by a taxpayer would not have the result of suspending the effect of the administrative act or decision imposing taxation on him and against which he complains, express provision to the contrary has been made by subsection

(2)of section 31. Thus, in my view, action taken by the Director under the proviso to subsection

(2)is of an executory nature, and not a mere act of execution, because it involves the reversal against a taxpayer of the legal situation created in his favour by the main part of such subsection

(2); and this takes place not automatically, but after the exercise of a discretion by the Director in the particular circumstances of each specific case. I find, therefore, that the preliminary objection taken by Counsel for Respondent, as above, cannot succeed. Coming now to the substance of this Case:— Counsel for Applicant has made it clear that he no longer objects to the payment of the tax demanded in relation to the undisputed part of Applicant's income in the years of assessment 1957-1960 and, therefore, this recourse must be deemed to have been abandoned to that extent; it is dismissed accordingly to the same extent. Counsel for Respondent on the other hand has stated that no income tax is claimed at all, any longer, from Applicant in respect of the year of assessment 1956. Thus, in effect, the demand made inrespect ofsuchyear bythe Director of Inland Revenue, exhibit 12,has to be deemed to have been accordingly revoked, and consequently the subject-matter of this recourse is to that extent to be regarded as having been abated. 434 Regarding the demands for the remaining years of assess-' ment, i.e. 1952-1955 (exhibits 4-6 and 11), counsel for the parties appear to have approached this Case merely on the basis of whether or not there exist in respect of such yearsof assessment valid assessments on the strength of which collection of taxispossible. Having duly considered the matter, I am of the opinion that this is not really the correct approach to the subjudice issue. We must not lose sight of the fact that we are concerned here only with demands for payment of income tax "not in dispute", in the sense of subsection

(2)of section 31ofLaw 53/63. I read the expression "not in dispute" to mean "not in dispute bywayof objection or recourse, asthecase maybe". It is clear that the subjudice demands were made on the 8th January, 1965,after recourse 129/64hadbeen filedonthe 2nd November, 1964,by Applicant against the assessments for the years of assessment concerned, and, therefore, we must look at thefileof proceedings of such recourse in order to discover whether the income tax, payment of which was asked for by such demands, was "not in dispute" by such recourse, when the demands in question were made. Looking at the Application in recourse 129/64, there can be no doubt that the tax claimed under the assessments in respect of the years of assessment 1952-1955 was—on the basis of certain of the grounds relied upon by.Applicant in such recourse—in dispute to the wholeextent of such assessments, and, therefore, in my opinion, the prerequisites of resort to the proviso to section 31

(2)were not satisfied, so as to entitle the Director of Inland Revenue to demand payment oftax"notindispute" in respect oftheyears ofassessment 1952-1955, while recourse 129/64wasstill pending. As a result such,demands (exhibits 4-6and11) were made contrary to lawand have to be annulled; it is, therefore, so declared accordingly. Regarding costs I think that Applicant is entitled to part thereof, which I assess at £15.— Sub judice demands of the Director of Inland Revenue declared nulland void. Orderfor costs as aforesaid. 435 1966 Mar. 17 April 30 THEOPHILACTOS MAVROMATIS (NO. 2) and THE REPUBLIC OF CYPRUS THROUGH 1. T H E DIRECTOR OF INLAND REVENUE 2. T H E MINISTRY OF FINANCE