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[TRIANTAFYLLIDES, P., STAVRINIDES, HADIIANASTASSIOU, A. LOIZOU, MALACHTOS, II.] 1977 * 3 MA NICOS ANASTASSIOU *• IN T H E MATTER O F ARTICLE 146 O F T H E CONSTITUTION NICOS ANASTASSIOU, S S S Applica

Article 28of the Constitution. (A) Per Triantafyllides, P.:

(1)That when the relevant interrelated legislative provi­ sions (Laws 55/74, 54/74, 51/74, 43/75, 15/75) are looked as a complete whole, it emerges that Law 55/74 is an allembracing enactment, applicable both to salaried and selfemployed persons, from the operation of which are exempted only those whose income is subject to reduction under Law 54/74 or Law 51/74 (nowLaw 36/75).
(2)That the combined effect of the provisions of section 51 of Law 58/61 and of section 3
(8)of Appendix Ό ' tothe Treaty of Establishment give to Law 55/74 extra-territorial 92 30 35 application to the extent which is necessary ίαorder to enable the respondents to require the applicant to pay under it a spe­ cial contribution.
(3)That Law 55/74 is, in essence, a taxing statute; that it is, indeed, a socio-economic measure which was introduced in view of the repercussions of the calamitous for our country events in thesummer of 1974; that in view of the fact that,in certain respects, a person such as the applicant, who is em­ ployed in the Sovereign Base Areas, is to be found on a diffe­ rent footing (sometimes better, sometimes worse) when he is compared toother salaried persons who reside and work in the Republic of Cyprus, it is not possible to hold that the require­ ment that the applicant, or any others like him, should pay a special contribution under Law 55/74 results in any unequal treatment or discrimination

Article 28of the

Con­ stitution merely because as submitted by counsel for -theappli­ cant, salaried persons, who reside and work in the Republic and whose emoluments are reduced under Law 54/74, enjoy, as regards tenure of office and terms of employment, thepro­ tection of the provisions of Law 50/74, whereas the applicant, who resides in the Republic but works in the Sovereign Base Areas, does not; and that no unreasonable or arbitrary classi­ fication is entailed, such as would warrant a finding that Law 55/74 offends against the principle of equality enshrined in Article 28 of the Constitution. (B) Per Stavrinides J.: That the matter,except as to thepoint about discrimination, is concluded in favour of the respondent by the combined ef­ fect of section 5 of the Income Tax (Foreign Persons) Law, 1961 and paragraph 3

(8)of Appendix 'O* to the Treaty of Establishment; and thatfor therest thepoint about discrimina­ tion must fail. (C) Per Hadjianastassiou, J. (Malachtos J.concurring).
(1)That the contention that Law 55/74 is applicable to the income of all self-employed persons only and is inappli­ cable to all salaried persons cannot be accepted because the purpose of section 3 of Law 55/74 (as amended by Law 43/ 75) in effect is to bring under the provisions of the Law all incomes which have notbeen subjected to any reduction,such as the applicant's incomewhich has not been subjected under theprovisions of Law 54/74. 93 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER)
(2)That once the money is brought into the Repubhc by the applicant—and thishas not'beendenied by the applicant— this case falls within the meaning of s. 5
(1)(b) of the Income Tax Laws 1961-1976 and therefore the income of the applicant is liable to special contribution under .the provisions of Law 55 of 1974 (as amended by Law 15 of 1975); and that, therefore, the contention of counsel on this issue must be dismissed.
(3)That Article 28 safeguards only against arbitrary differentiations and does not exclude reasonable distinctions which haveto be madein view of .the intrinsic nature of things, both as far as equality before the law is concerned and discrimination -thereof (Mikrommatis and The Republic, 2 R.S.C.C. 125 and Matsisv.Republic
(1969)3 C.L.R. 245,adopted and followed); that taking into consideration that all the salaried and self employed persons contribute to thesamecause, there isno room for the criticism by counsel that, because the employees of the Government of Cyprus enjoy a tenure of office, in contrast to the other employees working at the Sovereign bases, this results in a discriminatory or unequal treatment,

Article 28

of the Constitution; and that, therefore, the contention of counsel must be dismissed once the purpose of the law is to alleviate the suffering of a lot of other Cypriots. (D) PerA. LoizouJ.(MalachtosJ. concurring):

(1)That Law 55/74 does not only apply to self-employed persons but to all other sources of income which have not been subjected to any reduction under any other Law.
(2)For income to be taxable under section 5
(1)(b) of Law 53/63 it is not necessary to have accrued or be derived from a source in the Repubhc; .that it is enough if it was remitted and received in the Repubhc irrespective of wherethe services for which the gains or profits from such employment were rendered; and that as the meaning of the words "remitted and received in the Repubhc" in section 5
(1)of the Income Tax Laws 1961 to 1973 include the notion of bringing in as well, the applicant must be considered as a person having an income which renders him liable to pay special contribution in respect thereof, under Law 55/74 as amended by Law 15/75.
(3)That the tragic events and the disruption of the economy of the island that resulted therefrom necessitated the enactment of -theselaws;and thefact that the applicant belongs to a 94 5 10 15 different class from the point of view of terms of employment and employer and the repercussions that the situation prevailingin.theislandmighthaveon themrenders the differentiation made,by requiring them to pay contribution under Law 55/74 instead of 54/74 as other salaried people employed in the Republic, as not amounting to discrimination and unequal treatment; that there exist different circumstances which make the differentiation reasonable, in addition to the fact that salaried people under Law 54/74 have their contribution deducted at the source, whereas, contributions under Law 55/74 arepaid periodically, whichresults insomebenefit; that, therefore, there is a different treatment for different class of people and a reasonable at that, and that the fact that the applicant and people in his category do not enjoy the benefits of Law 50/74, does not change the situation so rendering Law 54/74 unconstitutional as claimed. Application dismissed. Cases referred to: Tomalinv. S. Pearson& Son Limited [1909] 2 K.B. 61; 20 Attorney-Generalof the Provinceof Alberta and Another v. Huggard Assets, Ltd. [1953] 2 All E.R. 951 at pp. 956957; C.E.B. Draper & Son, Ltd. v. Edward Turner & Son Ltd. [1964]3AUE.R. 148 atp. 150; 25 HenryKendall&Sons(a firm) v. William Lillico&Sons Ltd. andOthers[1968] 2AllE.R. 444; Spyrou and Others (No. 1) v. Republic
(1973)3 C.L.R. 478 at p. 484; Matsisv.Republic
(1969)3C.L.R. 245; RaiRamkrishna v.Bihar
(1963)A.S.C. 1667; 30 Jefferson v.Hackney, 32L-Ed. 2d 285 atp.296; Lehnhausenv. Lake Shore Auto PartsCo., 35 L.Ed. 2d 351 at pp. 354-355; GreshamLife Society v. Bishop, 4 T.C. 464 at p. 472; 35 Scottish Widow's Fund Life Assurance Society v. Farmer [1909] 5T.C.502; Thomson (Inspector of Taxes) v. Moyse [1960] 3 All E.R. 684; 95 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Harmel v. Wright (Inspector MiKrummaus of Taxes) [1974] 1 All E.R. 9 4 5 ; a n a ine nepuouc, ζ.!Λ.ΰΛ_.^. I Z J . Recourse. Recourse against the decision of the respondentCom­ missioner of Income Tax requiring applicant topay aspe­ cial contributionin respect of emoluments of his in 1975, under theprovisions of the Special Contribution(Tempo­ rary Provisions) Law, 1974 (Law 55/74). A. Triantafyllides with A. Economou,for the appli­ cant. A. Evangelou,Counsel of the Republic, for the re­ spondents. Cur. adv.vult. The following judgments were read:TRIANTAFYLLIDES, P.: This recourse is one out of a 15 series of similar recourses raising thesame legal issuesand it has been heardby theFull Benchof this Courtas a test case. The applicant complains against a decision of the re­ spondent Commissioner of Income Tax—(who comes un- 20 der the respondent Minister of Finance)—requiring him to pay a special contribution in respect of emoluments of his in 1975, under theprovisions of theSpecial Contribu­ tion (Temporary Provisions) Law, 1974 (Law 55/74). As it appears from the material before the Court the 25 applicant objected to thepayment of such contributionon the ground that heis an employee of theUnitedKingdom Government and so, though he resides at Larnaca, in the Republic, he works in the British Sovereign Base Areas, outsidetheterritory of theRepublic. 30 By a letter dated May 27, 1976, the respondentCom­ missioner rejected the applicant's objections; in suchletter (exhibit 2)hewrotetotheapplicantasfollows:"With reference to your objection against the 'Spe­ cial Contribution'levied onyou for thequarters 30th 35 June, 30th September and 31st December, 1975 un96 der assessment numbers 2642/2/75X, 2642/3/75X and 2642/4/75X respectively andfor which youhad filed before theSupreme Court Recourse No. 28/76, claiming that in accordance with the provisions of the Special Contribution (Temporary Provisions) Law, No. 55 of 1974 you are not liable to Special Contribution, I would like to inform you that after carefully considering your case,I have arrived at the conclusion, that you are subject to the provisions of the said law for reasons mentioned below and that I amunable tomodify theassessments: (a) Youarearesidentof theRepublic; (b) Under Section 3 of Law 55/74 any income derived from any source other than emoluments, in respect of any office or employment, in respect of which a provision for reduction has been made under the Emoluments (Temporary Reduction) Law No. 54 of 1974, is liable to 'Special Contribution'. (c) Your emoluments became liable to theprovisions of theSpecial Contribution (Temporary Provisions) Law No. 55 of 1974 as from 1st April, 1975 upon the enactment of theEmoluments (Temporary Reduction) (Amendment)LawNo. 15of 1975; (d) Byvirtueof Section 6of LawNo.55 of 1974, the provisions of theIncome Tax Laws 1961 to 1973 and of the Taxes (Quantifying and Recovery) Law No. 53 of 1963 as amended byLaw No. 61 of 1969 apply. Therefore under Section 5
(1)(b) of theIncome Tax Laws 1961 to 1973 your income accruing in, derived from or received in the Republic in respect of gains or profits from any office or employment, irrespective of whether you are serving in Cyprus or elsewhere is liable to Special Contribution. 2. As provided under Section 13
(2)(b) of the Taxes (Quantifying and Recovery) Law No. 53 of 1963 as amended by Law No. 69 of 1969,1 did not 97 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Trianiafyiiides, P. 1977 M ^ 3 NICOS ANASTASSIOU v. REPUBLIC CMTNISTER OF FrNANCE AND ANOTHER) Triantafyllides, P. accept your Returns of Income (form I.R.265) submitted on 4th November, 1975 in respect of the above mentioned quarters declaring N I L income and ^tGr enquiries made from your employers regarding your 1975 emoluments, to the best of my judgment I levied the Special Contribution as notified you under assessment Nos. 2 6 4 2 / 2 / 7 5 X , 2 6 4 2 / 3 / 7 5 X and 2 6 4 2 / 4 / 7 5 X sent on 29th November, 1975 and 28th February, 1976 respectively. 3. I enclose Notices of Contribution after objection". T h e relevant provisions of Law 5 5 / 7 4 are sections 2, 3 and 6 which read as follows:" 2 . - ( l ) In this Law, unless the context otherwise requires—'contribution' means the special contribution levied by this Law.
(2)Expressions used in this Law not otherwise defined shall have the meaning assigned to such expressions by the Income Tax Laws 1961 to 1973 and the Taxes (Quantifying and Recovery) Laws 1963 and
  2. For the quarter beginning as from the 1st October, 1974, and for every subsequent quarter during the period when this Law shall be in force, there shall be levied and paid a contribution at the rates and in accordance with the provisions set forth in the Schedule, on the income of every person which is derived from any source other than emoluments in respect of any office or employment, in respect of which provision for reduction has been made under the Emoluments (Temporary Reduction) Law 1974 or from rents in respect of which a provision for reduction has been made under the Dwelling Houses (Temporary Provisions) Law
  4. T h e provisions of the Income Tax Laws 1961 to 1973 and of the Taxes (Quantifying and Recovery) Laws 1963 and 1969 shall apply, mutatis mutandis, subject to the amendments set forth in the schedule, but no personal allowances shall be granted and 98 no income shall be exempt from the contribution save the income of an owner of a Cyprus ship asreferred toinsection 3of theMerchant Shipping (Taxing Provisions) Laws 1963 to 1973, including any income derived from the management of a Cyprus ship". As it appears from the provisions of section 3, above, a contribution is levied, under Law 55/74, on incomeof any kind other than income in respect of which provision for its reduction has been made by means either of the Emoluments (Temporary Reduction) Law, 1974, (Law 54/74) orof theDwellingHouses(Temporary Provisions) Law, 1974 (Law 51/74); and it is to be noted, in this respect, that when, later, Law 51/74 was replaced by the Rent Control Law, 1975 (Law 36/75), section 3 of Law 55/74 was amended accordingly by the Special Contribution (Temporary Provisions) (Amendment) Law, 1975 (Law 43/75). The relevant corresponding provisions of Law 54/74 are sections 2 and 3 thereof, which read as follows:"
  5. In this Law, unless the context otherwise requires:'abnormal situation' has the meaning assigned to thistermbysubsection
(1)of section2 of theTermination of Employment (Temporary Restrictive Provisions)Law, 1974;. 'Court' means"theIndustrial Disputes Court established by section 12 of the Annual Holidays with PayLaws1967to1973; 'emoluments' means remuneration in money paid in any manner whatsoever in respect of any office or salaried services, wherever exercised or rendered and includes any allowance, of a monetary or other kind, paid in consideration for such office or services but does not include any pension or any other retirement grant or gratuity or any sums paid by an approved Provident Fund; 'Law* means the Termination of Employment (Temporary Restrictive Provisions) Law, 1974. 99 1977 May-3 NICOS ANASTASSIOU v. REPUBUC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. May 3 NIC0S ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. 3.-(
  1. l)Notwithstanding theprovisions of anyother Law in force and during the abnormal situation for the purposes of this Law the emoluments shall be reduced by such percentage rate and on such terms asspecified intheSchedule: Provided that(
  2. a)where the emoluments have been reduced prior to the coming into operation of this Law no further reduction of such emoluments shall be made if the reduction already made is,equal to the reduction provided by this Law or if greater it has been madein accordance with the arrangements adopted at the time, otherwise the rate of suchreduction shall befixed in accordance with the procedure in force for the time being, andincasetheinterestedparties are unable to agree thereon, by the Court to which it shall be referred for determination, mutatismutandis,in accordance with section4of theLaw; (
  3. b)where the reduction made prior to the coming into operation of this Law is less than that provided by this Law then an additional reduction shall be made so that the total reduction shall be in accordance withtheprovisionsof thisLaw. (
  4. c)where after the coming into operation of this Law it should prove necessary on account of special circumstances to reducetheemolumentsby a higher rate than that provided in the Schedule, the rate of such reduction shall be determined in accordance with the procedure in force for the time being, and where the interested parties fail to agree thereon, by the Court to which it shall be referred for determination, mutatis mutandis, in accordance withsection4of theLaw: Provided further that where the person liable to pay the emoluments isthe Republic or any bodycor100 porate and it neglects to refer the case to the Court within ten days from the failure to reach an agreement, then any interested party may refer the case to the Court". 5 10 15 Both the above sections 2 and 3 were amended subsequently, but it suffices, for the purposes of this case, to refer only to the Emoluments (Temporary Reduction) (Amendment) Law, 1975 (Law 15/75), section 2 of which reads as follows:"2. The expression 'emoluments' in section 2 of the principal law is hereby amended by the deletion of the semicolon after the word 'Fund' (last line) and the addition of the words 'or emoluments earned by persons employed by foreign Governments or International Organizations'." Law 15/75 was published on April 4, 1975, and it is common ground that only then the question arose of applying the provisions of Law 55/74 to a person such as the applicant, who is employed by a foreign Government, 20 because, till then his emoluments were not clearly exempted from the definition of "emoluments" in section 2 of Law 54/74 and, therefore, he could not come within the ambit of Law 55/74. In order to complete the references to relevant legisla25 tion, in so far as it is necessary to do so in relation to this case, it is useful to mention, too, the Termination of Employment (Temporary Restrictive Provisions) Law, 1974 (Law 50/74), which is referred to in section 2 of Law 54/74, and the provisions of which are applicable in re30 ration to the operation of Law 54/74, but not in relation to the operation of Law 55/74. It has been the submission of counsel for the applicant that Law 55/74 is applicable only to the income of selfemployed persons, and not applicable at all to that of sa35 laried persons, such as the applicant. I cannot accept this view as a correct one. I think that, when the above referred to interrelated legislative provisions are looked at as a complete whole, it emerges that Law 55/74 is an all-embracing enactment, applicable both 101 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. to salaried and self-employed persons,from the operation of which areexempted only thosewhoseincomeissubject to reduction under Law 54/74 or Law 51/74 (now Law 36/75). The next submission of counsel for the applicant with which I will deal is that Law 55/74 is a Law of the Republic of Cyprus whichhas no extraterritorial application, and, therefore, it does not apply to the emoluments of a person, such as the applicant, which are earned in employment outside the territory of the Republic. In Tomalin v. S. Pearson& Son, Limited, [1909] 2 K.B. 61, the presumption of the non-applicability of statutes extraterritorially was referred to in connection with the Workmen's Compensation Act, 1906, and CozensHardyM.R.saidinthisrespect(atp.64):"It seems to me reasonably plain that this is a case to which the presumption which is referred to in Maxwell on the Interpretation of Statutes in thepassage at p. 213,which has been read by Mr. Waddy, must apply: 'In the absence of an intention clearly expressed ortobeinferred from itslanguage,or from the object or subject-matter or history of the enactment, the presumption is that Parliament does not design its statutes to operate beyond the territorial limitsof theUnited Kingdom'." The corresponding relevant passages in the 12th ed.of Maxwell on Interpretation of Statutes are to be found at pp. 169-177. In Attorney-General of the Province of Alberta and Another v. Huggard Assets, Ltd., [1953] 2 All E.R. 951, Lord Asquith of Bishopstone, in delivering the judgment of the Privy Council, stated the following (at pp. 956957):"The majority of the Supreme Court, as has been stated, based their decision, in the main, on the Statute of Tenures, 1660.Their reasoning assumes that thisstatuteapplied toCanada, or atleastto 'Rupert's Land'. The Act has no express 'extent* clause. An Act of the Imperial Parliament today, unless it pro102 vides otherwise, applies to the whole of the United Kingdom and to nothing outside the United Kingdom: not even to the Channel Islands or the Isleof Man, let alone to a remote overseas colony or possession. The question whether such an Act applied outside England (which, since 1536, has by Act of Parliament included Wales) must depend in such circumstancesontheintention of itsframers, tobededuced from the nature of its subject-matter and substantive provisions. It would, presumably, have no such external application if its subject-matter were beyond question of merely insular and domestic import. Their Lordships, if it were necessary to decide the point, would incline to theviewthat theAct of 1660 was of purely local application: that it applied to England only". InC.E.B. Draper & Son,Ltd. v.Edward Turner& Son, Ltd., [1964] 3 AUE.R. 148,Lord DenningM.R. said (at p. 150):- 25 "It seems to me that the Fertilisers and Feeding Stuffs Acts, 1926, applies only to sales which take place within the United Kingdom and not to those which take place elsewhere. This is in accord with the general rule that an Act of Parliament only applies to transactions within the United Kingdom and not to transactions outside;" Lastly, in Henry Kendall & Sons (a firm) v. William 30 Lillico & Sons,Ltd. and Others[1968] 2 All E.R. 444, though the Drapercase, supra, came under criticism in other respects, it was approved by the House of Lords in so far as it related to the non-applicability extraterritoriallyof the statutory provision concerned (see the judgment of Lord Morris of Borth-y-Gest, at p. 471). 35 It isproper toexaminethematter of thedisputed extraterritorial application of Law 55/74 together with the further submission of counsel for the applicant that his client is, in any case, not liable to pay any contribution under Law 55/74 because of the provisions of section 51 40 103 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. 1977 May 3 NIC0S ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. of Law 58/61—(which was,originally, section 75 of such Law, but wasrenumbered as section 51 by means of section28 of theIncomeTax (Amendment)Law, 1969(Law 60/69)). In thisrespect it should bebornein mind thatby means of section 6 of Law 55/74 the provisions of the 5 Income Tax Laws 1961 to 1973 (including Laws 58/61 and 60/69) and of theTaxes (Quantifying and Recovery) Laws 1963 and 1969 are rendered applicable, mutatis mutandis,inrelation to theoperation of Law 55/74;and, actually, as it appears from the already quoted letter of 10 the respondent Commissioner of Income Tax, of May27, 1976, reliance has been placed by him on the said section 6, as well ason section 5
(1)(b) of theIncome TaxLaws, when he stated the reasons for which the applicant isrequired to pay a special contribution under Law 55/74. ]5 Section 5
(1)(b), above, reads as follows:"5.-(
  1. l)Tax shall, subject to the provisions of this Law, be payable at the rate or rates specified hereafter for each year of assessment upon theincomeof any person accruing in, derived from, or received in 20 theRepublicinrespectof — (
  2. b)gains or profits from any office or employment, irrespective of whether the person employed is serving in Cyprus or elsewhere, including the estimated annual value of any quarters orboard or residenceorof anyother allowance granted in respect of employment whether in money orotherwise; 25 30 The afore-mentioned section 51 of Law 58/61 reads as follows:"51.-
(1)Notwithstanding anything in this Law contained, theliability to tax of theprofits or incomederivedby, or arising or accruing to, any person resi- 35 dent or employed in theSovereign BaseArea and the liability to tax of theprofits or incomederived by,or arising or accruing to, any member of the United KingdomForcesorciviliancomponent or Authorised Service Organisation or of the Forces of the King- 40 104 dom of Greece and the Republic of Turkey within the territory of the Repubhc shall be subject to the relative provisions of the Treaty"of Establishment or of the Agreement for the Application of the Treaty of Alliance signed at Nicosia on the 16th August, i960, as the case may be, and shall be charged, as­ sessed, levied, paid and collected subject to such pro­ visions.
(2)For thepurposes of this section10 15 20 25 (
  1. a)'Treaty of Establishment' means the Trea­ ty concerning the Establishment of theRe­ pubhc of Cyprus signed at Nicosia on the 16th August, 1960, and includes the Ex­ changes of Notes signed at Nicosia on the same date; (
  2. b)Any word or expression used in sub-section
(1)of this section shall bear the meaning assigned to it in the Treaty of Establish­ ment or in the Agreement for the Applica­ tion of the Treaty of Alliance signed at Nicosia on the 16th day of August, 1960, as thecase may be". The relevant part of the Treaty of Establishment of 1960 is Appendix Ό *thereto, section 3
(8)of which reads as follows:""
(8)Taxes * 30 35 40 Taxes, rates and fees payable by Cypriote or in re­ spect of Cypriot property in the Sovereign Base Areas will be as far as possible the same as those in the Republic. The Republic will be invited to collect and keep taxes, rates and fees due from Cypriote re­ sident or working in the Sovereign Base Areas or payable by Cypriots on privately owned or occupied immovable property therein. (This will apply also to taxes, rates and fees due from non-Cypriot residents and workers, exclusive of military personnel, civi­ lians working with them and their families)". In my opinion the term "taxes" in section 3
(8), above, is wide enough to include a special contribution such as the one imposed by Law 55/74. 105 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. In my view the combined effect of the provisions of section 51 of Law 58/61 and of section 3
(8)of Appendix Ό ' to the Treaty of Establishment give to Law 55/74 extraterritorial application to the extent which is necessa­ ry in order to enable therespondents to require the appli- 5 cant to pay under it a special contribution.This Court is not concerned, in this case, with the question of thema­ chinery for the collection of such contribution, in execu­ tionof the ao^riinistrative decision which has been attack­ ed by thepresent recourse;what had to be decided in this 10 case was only whether or not there exists an obligation on thepartof theapplicanttopay the contribution. The next step is to determine what is the exact provi­ sion of Law 58/61 which (in view of section 6 of Law 55/74) relates to the said obligation of the applicant. 15 I do not think that it is necessary to rely on section 5
(1)(b) of Law 58/61 for this purpose, because, in my view,theexpress wording of thefirst part of section 51
(1)of the same Law, far from excluding theobligation of the applicant to pay a special contributionunder Law 55/74, 20 does suffice by itself inorder torenderhimliable todoso, in view of the fact that his emoluments, in respect of which the contributionis demanded from him, amountto income "derived by, or arising or accruing to" him as a person employed in theSovereign Base Areas, in thesense 25 of section 51
(1). It should, perhaps, be pointed out, at this stage, that the fact that in his sub judice decision the respondent Commissioner of IncomeTax referred expressly tosection 5
(1)(b) of Law 58/61 does notpreclude this Courtfrom 30 upholding his decision, on thebasis of thesame facts, but on the strength of an alternative legal reason applicable to such facts, namely the effect of section 51
(1)of Law 58/61, in conjunction, of course, always, with section 6 of Law 55/74 (see, interalia, Spyrouand Others(No. 1) 35 v. TheRepublic,
(1973)3C.L.R.478, 484). The remaining issue with which I have to deal is the contention of the applicant that if he is found liable to pay special contributionunderLaw 55/74 then this would result in unequal treatment offending against Article 28 40
(1)
(2)of the Constitution, which reads as follows:106 "
  1. All persons are equal before the law, the administration and justice and are entitled to equal protectionthereof andtreatment thereby. 10
  2. Every person shall enjoy all the rights and liberties provided for in this Constitution without any direct or indirect discrimination against any person on the ground of his community, race, religion, language, sex,political or other convictions, national or social descent, birth, colour, wealth, social class, or on any ground whatsoever, unless there is express provision to the contrary in this Constitution". The approach of our Supreme Court to a complaint of unequal treatment in relation to a matter of taxation has been expounded in, inter alia, Matsis v. The Republic, 15
(1969)3C.L.R. 245. In this respect the Supreme Court of India said the following in the case of Rai Ramkrishna v. Bihar,
(1963)A.S.C. 1667, 1673 (see Seervai on Constitutional Lawof India, 2nded.,vol. 1,p.223):20 25 30 35 40 " . . . the power of taxing the people and their property is an essential attributeof the Government and Government may legitimately exercise the said powerbyreference to theobjects towhichitisapplicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed... according to the exigencies of its needs, because there can be nodoubt that the Stateisentitled toraiserevenueby taxation. The quantum of tax levied... the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of. the Legislature, and in dealing with the contention... that the taxing statute contravenes Art. 19, Courts would naturally be circumspect and cautious. Where for instance it appears that the taxing statute is plainly discriminatory, or provides no procedural machinery for assessment and levy of the tax, or that it is confiscatory, Courts would be justified in striking down the impugned statuteasunconstitutional". 107 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Triantafyllides, P. 1977 May 3 NICOS Useful reference may, also, be made to two rather recent decisions of the Supreme Court of the United States of America: ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) ~ Triantafyllides, P. In Jeffersonv. Hackney,32 L.Ed. 2d 285, Mr. Justice Rehnquist said(atp.296):- 5 "This Court emphasized only recently, in Dandridge v. Williams,25 L.Ed. 2d 491,501,that in 'the area of economics and social welfare, aStatedoesnotvio^ ^ g ^ p r o t e c t i o n Q a u s e m e r e l y beCause the classifications made by its laws are imperfect'." 10 InLehnhausenv.Lake ShoreAuto Parts Co.,35 L.Ed. 2d 351,Mr. Justice Douglas said (at pp. 354-355):"The Equal Protection Clause does not mean that a State maynot draw lines that treat one class of individuals or entities differently from the others. The 15 test is whether the difference in treatment is an invidious discrimination. Harperv. VirginiaBoard of Elections, 16 L.Ed. 2d
  1. Where taxation is concerned and nospecific federal right, apart from equal protection, is imperiled, the States have large leeway 20 in making classifications and drawing lines which in their judgment produce reasonable systems of taxation. As stated in Allied Storesof Ohio v.Bowers, 3L.Ed. 2d480: 'The States have a very wide discretion in the lay- 25 ing of their taxes. When dealing with their proper domestic concerns, and not trenching upon the prerogatives of the National Government or violating the guaranties of the Federal Constitution, the States have the attribute of sovereign powers in devising 30 their fiscal systems to ensurerevenue and foster their local interests. Of course, the States, in the exercise of their taxingpower, are subject to the requirements of the Equal Protection Clause of the Fourteenth Amendment. But that clause imposes no iron rule of 35 equality, prohibiting the flexibility and variety that are appropriate to reasonable schemes of state taxation. The State may impose different specific taxes upon different trades and professions and may vary the rate of excise upon various products. It is not 40 required to resort to closedistinctions or to maintain 108 a precise, scientific uniformity with reference tocom­ position,use or value'. 1977 May 3 In that case we used the phrase 'palpably arbitra­ ry' or 'invidious' as defining the limits placed by the Equal ProtectionClause onstate power". NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Law 55/74 is, in essence, a taxing statute; and it is, indeed, a socio-economic measure which was introduced in view of the repercussions of the calamitous for our country events in the summer of
  2. Inview of the fact that, in certain respects, a person such as the applicant, who is employed in the Sovereign Base Areas, is to be found on a different footing (sometimes better, sometimes worse) when heis compared toothersalaried persons who reside and work in the Republic of Cyprus, I do notthink that it is possible to hold that the requirement thattheap­ plicant, or any others like him, should pay a special con­ tribution under Law 55/74 results in any unequal treat­ ment or discrimination

Article 28

of the Con­ stitution merely because, as submitted by counsel for the applicant, salaried persons, who reside and work in the Republic and whose emoluments are reduced under Law 54/74, enjoy, as regards tenure of office and terms of employment, theprotection of the provisions of Law 50/ 74, whereas the applicant, who resides in the Republic but works in the Sovereign Base Areas, does not; in my opinion no unreasonable or arbitrary classification is en­ tailed, such as would warrant a finding that Law 55/74 offends against the principle of equality enshrined in Ar­ ticle 28 of the Constitution. For all the foregoing reasons it is my view that this re­ course should fail and has to be dismissed accordingly; but, I am not prepared, in the light of all relevant consi­ derations, tomake an order of costs against theapplicant. STAVRIN1DES, J.: In my judgment thematter,except as to the point about discrimination, is concluded in fa­ vour of the respondent by the combined effect of s. 5 of the IncomeTax (Foreign Persons) Law, 1961, and para­ graph 3

(8)of Appendix Ό ' to the Treaty of Establish­ ment. For therest I agree thatthepoint about thediscrimina­ tion mustfail. 109 Triantafyllides, P. 1977 May 3 NICOS ANASTASSIOU V. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Stavrinides, I. For these reasons I would dismiss the application. HADJIANASTASSIOU, J.:The present caseis oneof a number of cases raising the same legal issues, and following previous practice, we have exercised our jurisdiction under theprovisions of s.l1of the Administrationof Justice (Miscellaneous Provisions) Law, 1964 (Law 33 of 1964) and this case has been heard by the Full Court initsoriginal jurisdiction. This case raises the question whether the emoluments of the applicant of 1975 are hable to special contribution in accordancewith theprovisions of theIncomeTaxLaws 1961-1976, The Emoluments (Temporary Reduction) Law, 1974, (No. 54 of 1974); and The Special Contribution (TemporaryProvisions) Law 1974(Law55of 1974). Thefacts arethese:The applicant, Nicos Anastassiou of Larnaca is employed by the United Kingdom Government and he derives his income from employment with the Civilian Establishment andPay Office (CEPO) of theSovereignBase areas. He is a resident of the Repubhc and he complains against the decision of the Director of Inland Revenue to impose on him special contribution on his salary of
  1. Becausehisemolumentsbecameliabletotheprovisionsof Law No. 55 of 1974 as from April 1, 1975, (upon the enactment of the Emoluments (Temporary Reduction) (Amendment) Law No. 15 of 1975) he completed and submitted returns of income (Form I.R. 265) in accorddance with the provisions laid down under Regulation 2 of theSpecial Contribution (Temporary Provisions) Regulations, 1975, and he declared his income as being nil. Regulation 2reads asfollows:"Within one month from the date of approval of these Regulations, so far as the quarter beginning as from the 1stOctober, 1974,isconcerned, andwithin one month from the end of each subsequent quarter duringthetimewhen theLawshallbeinforce, every person liable to pay contribution shall be entitled to prepare and submit to the Director a return of income in respect of the quarter ended, whereupon he shall pay a temporary contribution in accordance with such return". 110 The Director of the Department of Inland Revenue, hereinafter referred to as the"Director", having examined theapplicant's returns of income, and after making enquiries from applicant's employers regarding his 1975 erao5 luments,hedecided andleviedonhimspecialcontribution of £ 4 2 for eachof thequarters endedJune30,September 30 and December 31, 1975.He notified the applicant by assessments sent to him on November 29, 1975, and February 28, 1976,respectively. 10 The appUcant, feeling aggrieved, objected by an undated letter and claimed that he was not hable to special contribution in accordance with the law without giving any further reasons. He simply added that he was at the disposal of the Director for any further information or 15 explanation. (See,exhibit1). The Director, having considered the objection of the appUcant, arrived at the conclusion that he was Uableunder the provisions of the law and proceeded with the determination of the assessment. On May 27, 1976, he ad20 dressed to the appUcant a long letter explaining his position whichisintheseterms:- 25 30 35 "With reference to your objection against the 'SpecialContribution' levied onyou for thequarters 30th June, 30th September and 31st December, 1975 under assessment numbers 2642/2/75X, 2642/3/75X and 2642/4/75X respectively andfor whichyouhad filed before theSupreme Court RecourseNo. 28/76, claiming that in accordance with the provisions of the Special Contribution (Temporary Provisions) Law, No. 55 of 1974 you are not Uable to Special Contribution, I would like to inform you that after carefuUy consideringyour case,I have arrived at the conclusion, that you are subject to the provisions of the said law for reasons mentioned below and that I amunabletomodify theassessments: (a) You arearesidentof theRepubhc; 40 (b) Under Section 3 of Law 55/74 any income derived from any source other than emoluments, in respect of any office or employment, in respect of which a provision for reIll 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. duction hasbeenmadeunder theEmoluments (Temporary Reduction) LawNo.54of 1974, isliableto'Special Contribution'. (c) Your emoluments became hable to theprovisions of theSpecial Contribution (Temporary Provisions) Law No. 55 of 1974 as from 1st April, 1975 upon the enactment of theEmoluments (Temporary Reduction) (Amendment)LawNo. 15of 1975; (d) By virtue of Section 6 of Law No. 55 of 1974, theprovisions of theIncomeTaxLaws 1961 to 1973 and of the Taxes (Quantifying and Recovery) Law No. 53 of 1963 as amended by Law No. 61 of 1969 apply. Therefore under Section 5(i) (b) of the Income Tax Laws 1961 to 1973 your income accruing in, derived from or received in the Repubhc in respect of gains or profits from any office or employment, irrespective of whether you are serving in Cyprus orelsewhere is Uable to Special Contribution.
  2. As provided under Section 13
(2)(
  1. b)of the Taxes (Quantifying and Recovery) Law No. 53 of 1963 as amended by Law No. 69 of 1969, I did not accept yourReturns of Income (Form I.R. 265)submitted on 4th November, 1975 in respect of the above mentioned quarters declaring NIL income and after enquiries made from your employers regarding your 1975 emoluments, to the best of my judgment I levied the Special Contribution as notified you under assessment Nos. 2642/2/75X, 2642/3/75X and 2642/4/75X senton 29thNovember, 1975 and 28th February, 1976 respectively. 3. I enclose Notices of Contribution after objection". In the meantime, the appUcant on June 10, 1976, filed thepresent recourse claiming that the amount imposedon him as a special contribution in respect of his salary in 1975, under the Special Contribution (Temporary Provisions) Law, 1974, (Law 55 of 1974) was not appUcable to him as he was a salaried and not a self-employed person. 112 Counsel on behalf of therespondent opposed the apphcation of the appUcant and claimed that the acts and/or decisions complained of wereproperly and lawfully taken after all relevant facts and circumstances were taken into consideration. "(
  2. a)The'SpecialContribution'for thequartersended 30th June, 30th September and 31st December, 1975werelevied under sections 3and 6 of theSpecialContribution (TemporaryProvisions) LawNo. 55 of 1974, Section 5
(1)(b) of the Income Tax Laws 1961 to 1975 and Section 13
(2)(
  1. b)of the Taxes (Quantifying and Recovery) LawNo. 53of 1963 asamendedbyLawNo.61of 1969. (
  2. b)The objections to the above 'Special Contribution' levied were determined under Section 20
(5)of the Taxes (Quantifying and Recovery) Law No. 53 of 1963 as amended by Law No. 61 of 1969". Thereis no doubt that because of the Turkish invasion theGovernment of Cyprus,havingregard to theabnormal situation, wasforced to take legislativemeasures of awelfare nature in order to protect the interest of the refugees whowereforced to leavetheir homes.Thefirst legislative measure of this nature was the Emoluments (Temporary Reduction) Law, 1974 (No. 34 of 1974) for the temporary reduction of emoluments for an office or salaried services. According to the definition section
(2): "In this Law, unless the context otherwiserequires:'abnormal situation* has the meaning assigned to thistermby subsection
(1)of section 2 of theTermination of Employment (Temporary Restrictive Provisions) Law, 1974; 'Court' means the Industrial Disputes Court estabUshedby section 12of theAnnualHoUdayswithPay Laws 1967to 1973; 'emoluments' means remuneration in money paid in anymanner whatsoever in respect of any office or salaried services,wherever exercised or rendered and 113 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBUC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. includes any aUowance,of a monetary or other kind, paid in consideration for such office or services but ^ o e s n o t m c m ( * e a n y pension or any other retirement grant or gratuity or any sums paid by an approved Provident Fund; 'Law' means the Termination of Employment (Temporary Restrictive Provisions) Law, 1974". Section 3 deals with reduction of the emoluments of an office andsaysthat:"3.
(1)Notwithstanding the provisions of any other law in force and during the abnormal situation for the purposes of this Law the emoluments shaU be reduced by such percentage rate and on such terms asspecified in theSchedule: Provided that(
  1. a)where the emoluments have been reduced prior to the coming into operation of this Law no further reduction of such emoluments shall be made if the reduction already made is equal to the reduction provided by thisLaw or if greater it has been madein accordancewith the arrangements adopted at the time, otherwise the rate of suchreduction shaUbefixed in accordance with the procedure in force for the time being,andincasetheinterestedparties are unable to agree thereon, by the Court to which it shaU be referred for determination, mutatis mutandis, in accordance withsection4of theLaw; (
  2. b)wherethereductionmadepriortothecoming into operation of this Law is less than that provided by this Law then an additional reduction shall be made so that the totalreduction shaUbein accordancewith theprovisionsof thisLaw; (
  3. c)where after the coming into operation of this Law it should prove necessary on account of special circumstances to reduce the emoluments by a higher rate than that 114 5 10 provided in the Schedule, the rate of such reduction shall be determined in accordance with the procedure in force for the time being, and where the interested parties fail to agree thereon, by the Court to which it shah be referred for determination, mutatis mutandis, in accordance withsection4of theLaw: Provided further that where the person liable to pay the emolumentsistheRepubUc or anybody corporate and it neglects to refer the case to the Court within ten days from the faUure to reach an agreement, then any interested party may refer the case to the Court". 15 With this in mind the first question is whether the apphcant's emoluments from his employment are Uable to special contribution. In solving this problem, I wouldre·1 fer toLawNo. 55of 1974whichhasbeenframed inthese terms:- 20 " 1 . This Law may becited as the Special Contribution (Temporary Provisions) Law, 1974 (No. 55 of 1974). 2.-(
  4. l)In this Law, unless the context otherwise requires- 25 30 35 'contribution' means the special contribution leviedbythisLaw.
(2)Expressions used in this Law not otherwise defined shall have the meaning assigned to such expressionsbytheIncomeTaxLaws 1961to 1973and the Taxes (Quantifying and Recovery) Laws 1963 and
  2. For the quarter beginning as from the 1stOctober, 1974, andfor every,subsequent quarter during the period when this Law shaU be in force, there shall be levied and paid a contribution at the rates and in accordance with the provisions set forth in the Schedule, on the income of every person which isderived from any sourceother than emoluments in respect of any office or employment, in respect of 115 1977 May 3 NICOS ANASTASSIOU v. REPUBUC . (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. which aprovision for reduction hasbeenmadeunder the Emoluments (Temporary Reduction) Law 1974 or from rents in respect of which a provision for reduction has been made under the Dwelling Houses (Temporary Provisions) Law
  3. 5
  4. TheDirector of the Department of Inland Revenue shall be charged with the implementation of this Law.
  5. Notwithstanding the fact that the contribution is not a tax, it shall be collected in accordance with io the provisions of the Tax Collection Law, 1962,and shall be deposited in the Fund for the ReUef of Displaced and Stricken Persons which isunder the control and management of the Accountant-General.
  6. The provisions of the Income Tax Laws 1961 15 to 1973 and of the Taxes (Quantifying and Recovery) Laws 1963 and 1969 shall apply, mutatismutandis, subject to the amendments set forth in the schedule,butnopersonalallowances shahbegranted and noincomeshallbeexemptfrom the contribution 20 save the income of an owner of a Cyprus ship asreferred toinsection 3 of theMerchant Shipping (Taxing Provisions) Laws 1963 to 1973, including any income derived from the management of a Cyprus ship". ThisLaw 55of 1974hasbeenamended byLawNo.43 of 1975,but in my view this amending law is immaterial for the determination of this case. Furthermore, as I said earlier, it is clear that Law 54 of 1974 provides for the reduction of the emoluments by such percentage or rate 30 of contribution as specified in the Schedule of the Law, but by virtue of s.2 of Law 15 of 1975, which amended Law 54 of 1974, the emoluments of persons employed by foreign Governments or International Organizations were excluded from the provisions of Law 54 of
  7. Section 35 2 of Law No. 15of 1975 provides as foUows: "The expression 'emoluments' in section 2 of the principal law is hereby amended by the deletion of the semicolon after theword'fund* (last line) andthe addition of the words 'or emoluments earned by per- 40 116 25 sons employed by foreign Governments or International Organizations'." Law 15 of 1975 was published in the official Gazette on April4,
  8. I think I can state that it has notbeen disputed byboth counsel that the appUcant being employed by a foreign Government he did not pay taxes under the provisionsof Law 54 of 1974 (as amended byLaw 15of 1975) and he has not been suffering reduction of salary from November 1,1974uptoMarch31,
  9. • Counsel on behalf of the appUcant submitted that Law 55of 1974isappUcabletotheincomeof aUself-employed persons only and is inappUcable to all salaried persons, including himself, who could only comeunder Law 54of
  10. With respect to counsel, I am unable to accept this contention because thepurpose of s.3 of Law 55 of 1974 (as amended byLaw 43 of 1975) in effect is to bringunder the provisions of the law aUincomes which have not beensubjected toanyreduction, such astheappUcant'sincome which, as I said earlier, has not been subjected under theprovisions of Law 54 of 1974.Furthermore, I find myself in agreement with the contentions of counsel for the Republic that Law 55 of 1974 (as amended) has nothing to dowith self-employed or employed persons, and I would, therefore, dismiss this contention of counsel. The next submission of counsel was that Law 55 of 1974 is a Law which has no extra territorial application, and asa result, it doesnot applyto emoluments of theapplicant which are earned in employment outside the territory of the Republic. But counsel went even further and put forward this argument, that notwithstanding the provisionsof s.6 ofLaw 55/74,theapplicantisstillnotliable topaycontribution underLaw55of 1974,onces.5(l) (b) of the Income Tax Laws, retied,upon by the respondent is not appUcable, because of s.51 of the sameLaw. I think before dealing with this contention of counsel, itwouldbehelpful tolook also at theprovisions of theIncomeTax Laws and the Taxes (Quantifying and Recovery) Law for charging, determining and coUecting special contribution. The Director based his decision on the chargingsection 5
(1)whichsaysthat: 117 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. "Tax shall, subject to theprovisions of thisLaw, be payable at the rate or rates specified hereafter for each year of assessment upon theincome of anyperson accruing in, derived from, or received in theRepublic inrespect of - 5 (
  1. a)gains orprofits from any trade,business,profession or vocation, for whatever period of timesuch trade, business,profession orvocation may have been carried on or exercised; (
  2. b)gains or profits from any office or employ- 10 ment, irrespective of whether the person employed is serving in Cyprus or elsewhere,including the estimated annual value of any quartersorboardorresidenceorof anyother aUowance granted in respect of employment 15 whetherinmoneyorotherwise". Then I turn to the proviso of s. 5
(3)which reads as follows:"Provided that a Cypriot estabUshed in theSovereign Base Area shall not for the purposes of this para- 20 graph be deemed to be established outside the Republic". It seems to me that from the wording of this proviso it is clear that the Cypriots cannot avail themselves of the provisions of s. 5
(3)which might exempt them from liabi- 25 lityunder certain circumstances referred toin that section. With this in mind, and having considered the argument of counsel, I find myself unable to agreethat thequestion of extraterritorial appUcation comesinto thepicture.Having read section 51 of the Income Tax Laws, upon which 30 counsel relies, I have reached the conclusion that it does not apply or help the argument of counsel once theapplicantisnot a member of theUnitedKingdom Forcesorcivilian component as specified by the Treaty of EstabUshment, and I would dismiss this part of the argument. 35 I think it is important to have in mind that in order to impose tax upon the income of any person, the income must accrue in,bederived from or received in theRepublicinrespect of gainsorprofits. Thequestion posed,there118 fore; is, where does the income of the appUcant accrue from or where is it derived from. I think I can state that I am faced with no difficulty in answering this question, that theapphcant's incomeaccrues and is derived outside the Repubhc, and I shall be quoting authorities in due courseinsupportof mystand. Counsel on behalf of the respondent, in a convincing argument, submitted that the words "remitted and re­ ceived in the RepubUc" should be given their true con­ struction that the money is brought into Cyprus. What constitutes a remittance,according to Pinson on Revenue Law, 7th Ed. at p. 167, is that "Incomeis remitted tothe United Kingdom if themoney or theequivalent of money in normal commercial usage (e.g., a cheque or bill of ex­ change) is received in the UnitedKingdom, either by the resident taxpayer himself or by another person to whom the taxpayer has directedpayment tobe made(e.g., acre­ ditor) " There is no doubt thatthere cannotbe a remittanceof any incomeunless thereis a receipt. Therefore, the sums received must be read subject to theprinciple thatincome tax is atax onincome, notuponcapital, andaccording to the words of TA 1970, s. 109
(2)which state that "tax is charged under Schedule D, cases IV and V in respect of income arising from securities or possessions". See Si­ mon's Taxes Vol. Ε "Taxes of Individuals", 3rd edn. at p. 164. I would reiterate that receipt is an essential condition because therecannotbe aremittance of any incomeunless there is a receipt. What is received may be the actual in­ come or some credit, property or value, therefor, but a mere clearance or entry in accounts will not in itself amount to areceipt. 35 40 In Gresham Life Society v. Bishop,4 T.C. 464 H.L., Lord Halsbury, dealing with thequestion of receipt as an essential condition to taxation, said at p. 472:"The question in this case seems to me to depend upon the actual words used by the Legislature, and I deprecateaconstructionwhichpassesby theactual words and seeks to limit the words by what is sup119 1977 May 3 NICOS ANASTASSIOU v. REPUBUC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 posed to be something equivalent to the language used by theLegislature... NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Now, here the money has not actuaUy been received in this country . . . . The Legislature must be supposed to have contemplated the possibiUty of 5 drawing adistinction between money received in this country and money accounted for or credited in account. If itwerenot for thedifficulty of ear-marking money I should think no one would have any doubt that the money must be received in this country to JQ bring it within the words of the statute". Hadjianastassiou, J. FinaUy, he said:" . . . . if the Legislature had intended that bringing it into account was to be equivalent to its being received, it would have been easy to say so.... I do not 15 think any amount of book-keeping or treatment of these assets, wherever they may be, wiU be equivalent to or the same thing as receiving the amount in this country. The words are simple, intelligible, and represent anordinary andsimplething.I cannotthink 20 we ought to go beyond the words themselves, and I think thisJudgmentought tobereversed". * In thesamecaseLordBramptonsaidatp.475:"If a 'constructive' receipt is the same thing as an actualreceipt, I seenoreasonfor theuseof theword 35 'constructive' at all. If it means something differing from or short of an actual receipt, then it seems to me that a constructive receipt is not recognised by the Statute,which in using theword 'received*alone, must be taken to have used it having regard to its 25 ordinary acceptation". In Scottish Widow's Fund Life Assurance Society v. Farmer, [1909] 5 T.C. 502, the Lord President, having observed that the law upon the subject of receiving has been already investigated and authoritatively settled by 30 the case of the GreshamLife Assurance Co. v. Bishop, posed the question "how can this money be said to have been received in this country", and said inter aliaat pp. 510-511:"But those areweU-known methods of remitting mo- 40 120 ney.The nearest to this case, or I might say the furthest that the Court has gone, was the caseofScottishMortgage &c. Companyof New Mexico,Limitedv.InlandRevenue, 1886, 14 R., 98 (2 T.C. 165) decided in this Court where it was held that money was actuaUy received in this country, although moneyhad not comein hard cash and had not beenremitted bybank draft, whereit had reaUy been gotin thiscountryby aCompany performing its remittance for itself. That is to say, money which on this side was not available for divident they had made availablefor divident and paid here,making a crossentry upon theother sideof the Atlantic, and thereputting the money available for dividend into a form not available for dividend. That case was a good deal discussed in theHouseof LordsintheGreshamcase. One of the noble Lords had doubts about it, but the general result wasthat the casewasapproved. It was pointed out what a veryspecial caseitwas,and Lord Lindley, who was one of those who approved of it, said the exchange was effected by a book entry, but that entry was a good business modeof carrying out cross remittances which it would have been unbusiness-like and really childish to have effected in any other way. On the other matter I am quite clearlyof opinion that this money has not been received in the United Kingdom. It is perfectly easy for theLegislature,ifthey sowish,tomakemoneyin this condition fall within the net of the tax gatherer. At present I do not think they have done so, and accordingly I think the determination of the Commissioners ought to be reversed". In Thomson(Inspector of Taxes)v.Moyse,[1960] All E.R. 684, H.L. "The taxpayer was a British subject domiciled in the United States of America but resident in the United Kingdom. Hewasin receipt of income in theUnited States,part of which arosefrom 'securities out of the United Kingdom' within the meaning of Case IV of Sch. D. to the Income Tax Act, 1918, and the remainder of which arose from 'possessions out of the United Kingdom' within Case V of that Schedule. Theincomewascredited to him in theBank ofNew 121 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. York. In the relevant years of assessment, the taxpayer drew cheques on the Bank of New York in favour of one or other of his two English banks and sold them to those banks for the sterling equivalent which he was paid immediately. The EngUsh banks sent the cheques to NewYork and cashed them,collecting thedollars there. The Special Commissioners found that the EngUshbanks acted asprincipals and not as the taxpayer's agents in cashing the cheques and coUecting the proceeds. The taxpayer was assessed to income tax in respect of the sums with which he was credited as being sums received in the United Kingdom (
  1. a)within Case IV, r.2, of Sch.D to the Act of 1918, and (
  2. b)within Case V, r.2, of Sch.Dto that Act". TheHouseofLordsheld: "Income of the taxpayer arising abroad had beenreceived assumsof money in the United Kingdom, for the taxpayer, by parting with the right to income in New York had obtained corresponding resources in the United Kingdom, and thus had effected a transmission of his income to theUnited Kingdom for the purposes both of Case IV and Case V, it being immaterialthatnomoneywasactuaUybroughtintothe United Kingdom in the course of, or in connexion with, the transaction; therefore, the assessments had beenrightlymade". Lord Reid,inreversing thedecision of theCourtofAppeal, having reviewed the authorities at length, said atpp. 688-689:"I return to the caseof a banker coUecting a cheque for a customer but bringing nothing into this country. A survey of the authorities has satisfied me that they contain nothing which precludes mefrom holding that, in every case where a customer employs a banker to collect, by means of his foreign cheque, money abroad which is part of his income, the sum which the customer receives in this country is a 'sum received' within the meaning of Cases IV, and V, and that it is immaterial that no money was in fact brought into this country in the course of or in connexion with the transaction. Indeed, I think it most 122 5 10 15 20 25 30 35 40 improbable that any of those learned judges whose judgments have been cited by the respondent would have disagreed with that view. From the point of view of the taxpayer, his income has been brought into theUnited Kingdom. Hehad,but nolongerhas, money in a bank abroad; he now has an equivalent amount of money in his hands in this country. How that was achieved is no concern of his, and I cannot read the statutory provisions as making his Uability to tax depend on the method which his banker employed". Lord Radcliffe, delivering his speech in the same case, said atp.690:"It is a straightforward story of a resident of this country selhng dollars in his bank account in New York in exchange for sterling which the bankers in London were ready to provide. The American bank account wasfed onlybythereceipt of income arising from hisAmerican securities orpossessions.I should say that, in the plain meaning of language, the sterling credits were sums received by him in this country out of hisAmerican income,which.had protanto been used to acquire them, and that in this sense he had 'brought over' his American income to the UnitedKingdom.Thatbeing so,thesumssoreceived are, inmyopinion,properly computedhiassessinghistax underCaseIVandCaseVofSch.D. What has puzzled me throughout is to seehow or why the banking transactions for effecting the remittance of his money from America to which the respondent resorted should be regarded as insufficient to constitute the sterling proceeds received as assessablesumsfor thepurposeof thesetwocases.Hedid not, of course,investhis American incomeinbullion or commodities to be shipped over here and sold or in United States dollar bills for similar reaUzation; but thennobody saysor supposes that assessability is confined to such transactions.Nor did heinstruct his bankers or agents to use hisdollar income in buying a bill on London which could have been discounted or presented here for payment. These would have been possible methods of 'bringing' the money here, and, no doubt, have been resorted to in their time. 123 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 M ^ 3 j^Qg ANASTASSIOU v. REPUBLIC (MINISTER A .m ΑΜΛΤυΐ!„. AND ANOTHER) __ Hadjianastassiou,j . But what hedid do seems to me to have been in aU essentials a similar transaction,and to haveamounted just as muchto a 'bringing' in therelevant sense. He wrote out his cheques onhis New York bankers directing them to hand over his doUars to or to the 5 order of his United Kingdom purchasers, and these purchasers in return acknowledged a sterling debtto him calculated at the current rate of exchange be^T TT .°, . tween New York and London. He parted with his doUars;hegot his sterling. Heemptied onepocketof 10 doUars in order to fill anotherpocket with sterling". In arecentcase,Harmelv. Wright (Inspector ofTaxes), [1974] 1A11E.R. 945, "The taxpayer, who was residentin theUnited King­ dombut domicUedinSouthAfrica, was employedby 15 two SouthAfrican companies at a substantial salary. In order toreducehistax UabiUtyintheUnitedKing­ dom, he adopted a scheme whereby two companies were incorporatedin SouthAfrica. Thetaxpayer was thedirectorandthebeneficial owner of all theshares 20 in thefirst company;theshares inthesecond compa­ ny were owned by persons on whom the taxpayer could rely to carry out his scheme. The taxpayer's salary was paid in SouthAfrica andwas invested by him by subscribing for shares in the first company. 25 That companythenlent themoneyreceived from the taxpayer to the second company, which in turnlent the borrowed money to the taxpayer in theUnited Kingdom.Ineachcasethe loanswerefree of interest andrepayable ondemand.Thetaxpayer claimedthat 30 he was notUableto incometax underSch.E,para I a case III, of s. 156 of theIncome Tax Act 1952 on the sums received from the second company onthe ground that the emoluments paid to him in South Africa had become shares in the first company and 35 what was received by him in the United Kingdom were merely loans extended to him by the second company". It was held that:"The loans received by the taxpayer were derived 40 a as amended 124 from the appUcation of the taxpayer's income in South Africa to achieving the necessary transfers which had led to his receiving money from the second company. Accordingly loans from the second company represented and were the emoluments paid to him in South Africa and, therefore, having been received byhimin the UnitedKingdom,were subject to income tax under Sch.E, para I Case III. Thomson (Inspectorof Taxes)v.Moyse [1960] 3AUE.R. 684 appUed". Templeman, J., dealing with theprovisions of s. 156of the Income Tax Act 1952, on the question of receiving moneyinEngland,saidatpp. 950-951:- , 15 20 25 30 35 40 "When the taxpayer took up his employment in this country itwaswith theknowledge that if hereceived any emoluments in this country from his South Africanemployers thoseemoluments wouldbetaxed.On the other hand, if he avoided tax by not receiving emoluments, and he had no other source of income, then he would starve. In the result, the taxpayer, as he was entitled to do, took steps to ensure, so far as was practicable, that he would be neither taxed nor starved. What happens is this: when the South African companies pay the taxpayer, they donot pay the money tohiminthiscountry becausethat, of course, would immediately cause tax to be exacted under s. 156; they pay it to him in South Africa . . . The taxpayer can ensure that hedoesnot starve and wiUget the money because the chain of events and thepowers of control exercisable by the taxpayer are such that heisin no danger. Hecan ensureperfectly safely that a sum, by no coincidence equal to his salary, less, perhaps, a few costs which have dripped away in the meantime, will be avaUable to him in London ignoring the costs that wiU drip away, that sum begins in South Africa from the employers of the taxpayer and ends up in this country with the taxpayer. In my judgment, on the pecuUar circumstances of this case... the sums which the taxpayer eventuaUy receivesrepresent and aretheemoluments which start off from his South African employers in the first place". 125 1977 May 3 . NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 NICOS ANASTASSIOU V. REpuBLic (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. The learned Justice, having dealt with the authorities, quoted a passage from the speech of Lord Radcliffe in Thomson v.Moyse(supra) at p. 692.Thispassagereads:" . . . the computation in respect of income from foreign securities depends simply on the question what is the amount of sums which havebeen or wiUbereceived in the United Kingdom in the year of assessment. No doubt proper construction of those words requires that the sums computable must be sums 'of the income, by which I would understand 'sums of money derived from the appUcation of theincometo achieving the necessary transfer*. But that is all. If sterling sums are received and are so attributable, thatisenoughforUabiUty". Then, havingappUedthetest adumbrated byLord Radcliffe, he posed this question: whether the sums of money received here had been derived from the application of a taxpayer's income in South Africa to achieve thenecessary transfers which led to his receiving money from Lodestar, and said:"The question turns on the meaning of the word'derivation'. Can you, as I think, start with £25,000 traceit through to thetaxpayer andsaytheoneisderivedfrom the other, or must you, as counsel for the taxpayer says, trace the money as far as the shares in Artemis and, having got there, say it stays there? I see no reason why derivation should stop at the shares, and I have come to the conclusion that the commissioners, in deciding this matter in favour of the Crown,wereright". FinaUy,hesaidatp.954:"If one asks whether, in fact, the original sums paid in South Africa have been used or enjoyed in any manner or in any manner or form transmitted, it is difficult to avoid the conclusion that they have been used, enjoyed and transmitted. AUI need say is that para 8 is not inconsistent with the result which I reach by construing s. 156 in the Ught of the authorities". Having considered the authorities, I have reached the 126 conclusion that once the money is brought into the Repubhc by the applicant—and this has not been denied by theappUcant—this casefans within themeaningof s. 5
(1)(b) of theIncome Tax Laws 1961-1976 and therefore the 5 income of the appUcant is Uable to special contribution under the provisions of Law 55 of 1974 (as amended by Law 15 of 1975). I therefore dismiss the contention of counsel on thisissue. FinaUy, the last complaint of counsel was that evenif 10 the appUcant was found to be Uable to pay contribution, that would offend against the principle of discrimination andunequal treatment enunciated under theconstitutional provision of Article28. It seems to me that the approach of this Court regard15 ing this complaint has been clearly stated in a number of authorities dealing with taxation, starting with the caseof MikrommatisandTheRepublic,2 R.S.C.C 125 andMatsisv. The Republic
(1969)3 C.L.R. 245, which wasdecided by the FuU Court. These authorities show that the 20 principle enunciated is that Article 28 safeguards only against arbitrary differentiation and does not exclude reasonable distinctions which have to bemadein viewof the intrinsic nature of things, both as far as equaUty before the law is concerned and discrimination thereof. Because 25 this principle has ever since been reiterated in a line of other cases, I do not think it is necessary to quote other authorities to substantiate this point further. I would, therefore, contend myself by simply adopting and foUowing theprinciple already stated. Testing the constitutiona30 Uty of Law 55 of 1974, I have taken into consideration that once aUthe salaried and self-employed persons contributetothesamecause,I donot think that thereisroom for the criticism bycounsel that because the employeesof the Government of Cyprus enjoy a tenure of office, in 35 contrast to the other employees working at the Sovereign bases,that thisresultsinadiscriminatory orenequal treatment,

Article 28of the Constitution.

I would, therefore, dismiss thiscontention of counsel also,oncethe purpose of the law is to alleviate the suffering of a lotof 40 other Cypriote. Having reached this conclusion, and because theappUcant hasfailed tosatisfy methat theprovisions of Law 55 127 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) Hadjianastassiou, J. of 1974 are unconstitutional beyond reasonable doubt— and the onus remains on him—I would dismiss this application, once I have not been persuaded that the said law contravenestheprinciples alreadyenumerated inthecases quoted earher. Recoursedismissedwithnoorderastocosts. A. LOIZOU,J.:Bythepresentrecoursewhichhasbeen heard by the FuUBench directly in the exercise of itsrevisional jurisdiction under Article 146 of the Constitution asthere was a great number of other pending cases await- 10 ing the determination of the issues raised herein, the applicant seeks theannulment of the decision of therespondents to impose special contribution on him in respect of hissalary received during theyear 1975 or any part thereof, under theSpecialContribution (TemporaryProvisions) 15 Law, 1974(LawNo.55/74). The grounds of law rehed upon are the foUowing:"1. AppUcant aUegesthat heisnotUabletopayany special contribution inasmuch asheis being employedbytheUnitedKingdom Government andhisplace 20 of employment is in the Sovereign U.K. Areas, and outsidetheterritory of theRepubhc.In anycaseLaw 55/74 isnot appUcableto AppUcant asheissalaried andnot a self-employed person. 2. If it isfound that AppUcant is Uableto special 25 contribution on the basis of Law 55/74 then it will be submitted that Law 55/74 is unconstitutional,

Article 28of the Constitution, in that it discriminates against App

Ucantbecause, (

  1. a)other Cypriots who work outside the territo- 30 ry of the Repubhc and in the territory of other countries are not Uable to special contribution. (
  2. b)AppUcant although a salaried employee,pays morethan other salaried persons who are co- 35 veredbyLaw 54/74. 3. In any case, the decision itself to imposespecial contribution on AppUcant is, irrespective of the 128 5 unconstitutionaUty or otherwise of theLaw discrimi­ natory,ontheabove grounds. 1977 May 3 4. Law 55/74 has to be read in conjunction with Law 50/74. Both laws do not have extra territorial jurisdiction or appUcation. That is to say, the Re­ pubhc has no control over foreign employers in so­ vereign territories e.g. does not have control over Applicant's employer which is the United Kingdom Government in the Sovereign Areas, and, therefore the AppUcant cannotavaU himself of thebenefits of Law 50/74, providing interalia, against the termina­ tion of employment as in the case of other Cypriots who areemployed by local employers. NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) 5. Law 55/74 has noextra territorial application and consequently AppUcant is not Uable, under the provisions of the said law to pay any special contri­ bution. Law 55/74 does not apply to salaried but to self-employed persons only". The apphcant, a resident of the Republic, is employed by the United Kingdom Government, in the Sovereign Base Areas and derives his incomefrom employment with what is known as the CiviUan Establishment and Pay Of­ fice (C.E.P.O.). In accordance with the provisions under Regulation 2 of theSpecial Contribution(Temporary Pro­ visions) Regulations, 1975, the applicant completed and submitted returnsof incomeinrespect of thequarters that ended 30th June, 30th September and 31st December, 1975, anddeclaredhisincomeasnil. The respondent Director of the Department of Inland Revenue on examining the said returns, decided that the applicantwas liable tospecial contribution,underthe pro­ visions of the Special Contribution (Temporary Provi­ sions) Law, 1974 (Law No. 55/74), as from the 1st April, 1975, upon the enactmentof the Emoluments(Tempora­ ry Reduction) (Amendment)Law, 1975 (Law No. 15/75) the appUcantbeing a resident of theRepublic and bearing inmindalso theprovisions of paragraph 3

(8)of Appendix Ό* of the Treaty of EstabUshment and the Provisions of the Ordinance 'Powers and Duties (Officers of the Re­ public of Cyprus) Ordinance, 1960 and 196Γ enacted by the Administrator of the Sovereign Base Areas. It levied 129 A. Loizou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE: AND ANOTHER) A. Loizou, J. as special contribution the sum of £42.- for each of the aforesaid quarters. It notified the applicant in duecourse, but the appUcant objected to this decision claiming that he is not Uable to special contribution (exh. 1). To this objection the respondent Director repUed by letter dated the27thMay, 1976(exh.2)asfoUows: 5 " . . . . I would like to inform you that after carefully considering your case, I have arrived at the conclusion, that you are subject to the provisionsof the said lawfor reasons mentioned below and that I 10 amunabletomodify theAssessments: (a) Youarearesident of theRepublic; (b) Under Section 3 of Law 55/74 any income derived from any source other than emoluments, in respect of any office or employ- 15 ment, in respect of which a provision for reduction has been made under the Emoluments (Temporary Reduction) Law No. 54/ 1974, is Uable to 'Special Contribution'. (d) ByvirtueofSection6 ofLaw 55/74,thepro- 20 visions of the Income Tax Laws 1961 to 1973 and of the Taxes (Quantifying and Recovery) Law No. 53 of 1963 as amended by LawNo. 61 of 1969 apply. Therefore, under Section 5
(1)(b) of the Income Tax Laws 25 1961 to 1973 your income accruing in, derived from or received in the Republic in respect of gains or profits from any office or employment, irrespective of whether you are serving in Cyprus or elsewhere is liable to 30 Special Contribution. 2. As provided under Section 13
(2)(b) of the Taxes (Quantifying and Recovery) Law No. 53 of 1963 as amended byLaw No. 61 of 1969, I did not accept yourReturns of Income (Form I.R. 265) sub- 35 mitted on 4th November, 1975 in respect of the above mentioned quarters declaring NIL incomeand after enquiries made from your employers regarding your 1975 emoluments, to the best of my judgment I levied the Special Contribution as notified you un- 40 130 der assessment No; 2642/2/75X, 2642/375X and 2642/4/75X sent on29th November, 1975 and 28th February, 1976 respectively. 3. Γenclose Notices of. Contribution after objec­ tion?'. The apphcant's.emoluments became Uable to the pro­ visions of the.Special Contribution (Temporary Provi­ sions) Law 1974 (Law No. 55/74) as from the 1st AprU, 1975 upon theenactment of theEmoluments (Temporary Reduction) (Amendment)·Law, 1975 (Law No. 15/75). The abnormal situation which is defined in the Termi­ nation of Employment (Temporary Restrictive Provisions) Law, 1974,.(Law 50/74), as meaning "thesituation creat­ ed as a consequence of theTurkish invasion . . . " brought about also,a disruption of theeconomy which theGovern­ ment faced with a series of measures. One of such mea­ sures was the Emoluments (Temporary Reduction) Law, 1974, (Law 54/74) enacted on the 1st November, 1974, whose title reads: "A Law torequire.the temporary reduc­ tion of emoluments for an office or salaried services for the duration of the abnormal situation arising;as.a-conse­ quenceof theTurkish invasion and toprovide for matters connected therewith". Under section 3
(1)thereof, "Notwithstanding theprovisions of any otherLaw in - force and during the abnormal situation for thepur­ pose of this Law theemoluments shall be reduced by such percentage rate and'on such terms as specified in the Schedule". And "emoluments' were defined in section 2 of this Law, as meaning, "remuneration in money paid in any mannerwhatso­ ever in respect of any office or salaried services, .wherever exercised or rendered and includes any al­ lowance, of a monetary or other kind, paid in consi­ deration for such office or services but does not in­ clude any pension or any other retirement grant or gratuity or any sums'paid by an approved Provident Fund". 131 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF-FINANCE AND-ANOTHER) A. Loizou, J. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) A. Loizou, J. The person liable to pay such emoluments, and where thebusiness carried on by him wasnot a strikenbusiness, had to pay the amount of the reduction of the payable emoluments at the end of each month, into the ReUef Fund for Displaced and Striken Persons; whether a businesswas striken or not it had tobedetermined in accordance with the provisions of the Termination of Employment (Temporary Restrictive Provisions) Law, 1974, (Law 50/74). It is not in dispute that this Law covered thereductionofemolumentsof employees. On the same day the Special Contribution (Temporary Provisions) Law, 1974 (Law 55/74) was enacted for the purpose of making temporary provisions for the payment of special contribution for meeting again the abnormalsituation and relevant matters. Under section 3 thereof, "For the quarter beginning as from the 1st October, 1974, and for every subsequent quarter during the period whenthisLaw shaUbeinforce, thereshallbe levied and paid a contribution at the rates and in accordance with the provisions set forth in theSchedule, on theincome of everyperson which isderived from any source other than emoluments in respect of any office or employment, in respect of which a provision for reduction has been made under the Emoluments (Temporary Provisions) Law, 1974". TheDirector of theDepartment of Inland Revenuewas charged with the implementation of this Law and thecollection of contributions, though not a tax, was to becollected in accordance with the provisions of the Tax Collection Law, 1962 and deposited in the same fund. By virtueof section 6thereof, "The provisions of the Income Tax Laws 1961,to 1973 and of the Taxes (Quantifying and Recovery) Laws 1963 and 1969 shall apply, mutatis mutandis, subject to the amendments set forth in the schedule, but no personal aUowances shall be granted and no income shall be exempt from the contribution save the income of an owner of a Cyprus ship as referred to in section 3 of the Merchant Shipping (Taxing Provisions)Law 1963to 1973,including anyincome derived from the management of a Cyprus ship". 132 The amendment of this Law by Law 43/73 is immaterialto thepresentproceedings. Law 54/74 was amended by the Emoluments (Temporary Reduction) (Amendment) Law 1975, (Law 15/75). By section 2 thereof the expression "emoluments" in section 2 of the principal law, that is to say, Law 54/74, hereinabove setoutwasamended bythe addition after the word "Fund" (last line) of the words "or emoluments earned by persons employed by a foreign Government or 10 International Organizations". The appUcant being a personemployed byaforeign Government didnot until then, pay contributions under Law 54/74 and did not suffer any reduction from his emoluments from the 1st November 1974untilthe31stMarch,
  1. 15 Under section 3 of Law 55/74 the income of every person which is derived from any source other than emoluments in respect of any office or employment in respect of which a provision for reduction has been made under the Emoluments (Temporary Reduction) Law 1974 (Law 20 54/74), or from rents in respect of which a provision for reduction has been made· under the Dwelling Houses (Temporary Provisions) Law 1974 (Law 51/74) (now Law 36 of 1975), is Uable to pay a contribution at the rates and in accordance with the provisions as setforth in 25 theSchedule. BytheenactmentofLaw 15/75 thepositionof persons in the employment of foreign governments was clarified, so that income from any other source under section 3of Law 55/74 wasmadetoapply tosuchcases asthat of the 30 appUcant.Theeffect of Law 55/74 wastobringunder its provisions all kinds of income which had not been subjected to any reduction and the appUcant's income was one of those incomes which had not until then, been subjected to any reduction, orin any event, if it wasUableto 35 paycontributionunder section 3of Law 55/74,itwasnot so clear. The fact was that until the 1st of April, 1975, people in the category of the appUcant, had riot paid any contribution as such emoluments were considered as excluded as a.source of income from the meaning of the 40 word "emoluments" under Law 54/74, and upon taking thisincomeoutof themeaningof theword"emoluments" they became Uableto pay contribution under section 3of 133 1977 May.
  2. NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND. ANOTHER) A. Loizou, J. 1977 May .3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) A. Loizou, J. Law 55/74, which, thereby, was made appUcable to the income of both self-employed and salaried persons except income subject to reduction under the other Laws,name­ ly, Laws54/74 and 36/
  3. Law 50 andLaw 51 of 1974 (now Law 36/75) have nothing to do with the present case, as the salary of em­ ployed has not been subjected to other reduction. 5 The Special Contribution (Temporary Provisions) Law 1974 (Law 55/74) does not only apply to self-employed persons but to all other sources of income which havenot 10 been subjected to any reduction under any other law. Under section 6 of Law 55/74 (as amended) the pro­ visionsof theIncomeTax Laws 1961-1973and theTaxes (Quantifying and Recovery) Law, 1963, (Law 53/63) as amended by Law 61/69, are made applicable mutatis mu­ tandissubject tothe amendments set forth in the Schedule which amendments have no bearing in the present case. So one has to go to these provisions for charging, deter­ mining and collecting this special contribution though not a tax within themeaning of theIncomeTax Laws. 20 The sub judice decision was based on section 5
(1)(b) of the Income Tax Laws, 1961 to 1973, as being income "receivedin theRepubhc", irrespectiveof whether the ap­ plicant was serving in Cyprus or elsewhere. The said sec­ tionreads as follows:- 25 "5.
(1)Τηρουμένων των διατάξεωντοΰπαρόντος Νό­ μου δι* εκαστον φορολογικδν έτος επιβάλλεται, βάσει φορολογικών συντελεστών είδικώτερον έν τοις εφεξής καθοριζομένων,φόρος έπι τοΰ εισοδήματος παντός προ­ σώπου τοΰ κτώμενου ή προκύπτοντος έν -η) Δημοκρατία ή αποστελλομένου και λαμβανομένου εις τηνΔημοκρατίαν, εκ τών κατωτέρω αναφερομένωνπηγών, ήτοι: 15 3 (α) (β) κέρδη ή άλλα οφέλη εξ οιουδήποτεαξιώματος ή μισθωτών υπηρεσιών, ανεξαρτήτωςτοΰαν το ύποκείμενον της φορολογίας παρέχητάςυπηρε­ σίας αΰτοΰεν Κύπρωήάλλαχοϋ, περιλαμβανο­ μένηςτης κατ'έκτίμησιν ετησίας αξίας καταλύ­ ματος, στέγης και διατροφής ή οικίας, ώς και 134 3 παντός ετέρου επιδόματος, χρηματικής.ή;αλλης :μορφής, χορηγουμένου άναφορικώς προς παρεχομένας μισθωτάς υπηρεσίας". The English translation of the aforesaid provision as 5 given in the text prepared and published by the 'Revision and Consolidation of the Cyprus LegislationOffice, reads as follows:- 10 "5.-(
  1. l)Tax shall, subject to the provisions of this Law, be payable at the rate or rates specified ,hereafter for each year of assessment upon the income of any person accruing in, derived from, or received in the Republic in respect of (
  2. a)15 20 (
  3. b)gains ΌΓ .profits from any .office or .employment,•irrespective of .whether the person em­ ployed is serving in Cyprus or.elsewhere, in­ cluding the estimated annual value of .any quarters orboardoDresidenceor of.any«other allowance granted inirespect.of employment whether in money or otherwise". It has been argued on behalf of ! the respondent that the words "apostellomenou ke lamvanomenou"-which verba­ tim should be translated as "remitted and received" in­ stead "simply received" read in conjunction with thewords 25 "whether the person 'employed is serving in Cyprus or elsewhere' ", cover the case of the appUcant for two rea­ sons:-First, because the word "Cyprus" used in para, (
  4. b)should be taken as meaning the whole of the island in­ cluding that part of it which constitutes'the British 'So30 vereign Base Areas as comparedwith theword "Repubhc" appearing in sub-section
(1)thereof, which, word, is de­ fined in section 2, as meaning the"Repubhc of-Cyprus. Secondly, that the words "remitted and received" in'the Republic, should be interpreted as including the notion of 35 bringing in as well as their "remittance" even if accruing or:paid elsewhere and this is further .demonstrated by the word "elsewhere" to be found in para, (
  1. b)^thereof, after the words "whether the person employed is :serving in Cyprus or elsewhere". This is further borne .out by the 40 wording of section 8(
  2. u)which exempts part of income in foreign exchange imported jinto the Republic from the >135 .1977 -May 3 INIGOS ANASTASSIOU .v. .REPUBLIC .(MINISTER ;OF .FINANCE .AND.ANOTHER) A. Loizou, J . 1977 May 3 .NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) A. Loizou, J. rendering outside the Republic of salaried services toprivate business, which shows that such income is otherwise taxable. The differentiation between the meaning of the word "Cyprus" and the word "Republic", though attractive, 5 seems to me to have been accidental, and no particular meaning should be ascribed to it, if one looks to thelaw as a whole. For example, in section 5, sub-section 3(
  3. b)with regard to the definition of a Cypriot, express reference is made to the individual who was born in the "is- 10 land of Cyprus", which includes, obviously, those bornin the parts of the island which, since independence, form part of theSovereignBaseAreas.On theotherhand,however, andfeelingboundbythestrictwordsof theLaw,the words "remitted and received" may not necessarily pre- 15 suppose actual receipt in the Repubhc. As stated in the case of theScottishWidow'sFundLife Assurance Society v. Farmer (Surveyorof Taxes) 5 T.C. p. 502 by Lord Johnston, The Lord President, at p. 508 with regard to the meaning of the word "received in this country" to be 20 found inanIncomeTaxprovision, "Now, actual receipt of money, it seems to me, can only be effected in one of two ways. Either themoney itself must bebrought over in specie, or themoneymust besent in theform which,according to the 25 ordinary usages of commerce, is one of the known forms of remittance". Useful is also the interpretation given in Thomson(Inspectorof Taxes)v.Moyse [I960] 3AllE.R. 684, to the words "received in the United Kingdom" and "actually 30 received in the United Kingdom from remittances" to be found in rule 2 of the rules appUcable to Case V of the Income Tax Act, 1918, which considered in the light of theline of authorities referred totherein has abearingon the issue before us. As pointed out by Lord Reid at p. 35 689"From thepoint of view of the tax-payer, hisincome has been brought into the Umted Kingdom. He had but no longer has, money in a bank abroad; henow has an equivalent amount of money in his hands in 40 thiscountry.How that wasachieved isno concernof his, and I cannot read the statutory provisions as 136 making his liability to tax depend on the method whichhisbanker employed". Theremust be acquittance and receipt in someform or other, but I would say, that it makes no difference, 5 whether the amount wasactually remitted and received in the Repubhc, or the person entitled to earn the income outside the Republic, goes and brings it himself into the Repubhc, as it is the case of the appUcant. Otherwise, it would lead to an awkward situation whereby income ac10 cruing outside but received in the Repubhc, was to be taxable, if remitted by some banking or other method or brought inby acourier onbehalf of thetaxpayer,but not taxable, if the tax-payer entitled to it went and brought it himself. 15 For income to be taxable under s.5(
  4. l)(b), it is notnecessary tohaveaccrued orbederivedfrom a sourcein the Repubhc. It is enough if it was remitted and received in the Repubhc, irrespective of where the services for which thegains or profits from such employment were rendered 20 and having concluded that the meaning of the words "remitted and received" in the RepubUc include the notion of bringingin asweU,the appUcantmustbeconsidered as a person having an income which renders him liable to pay special contribution in respect thereof, under theSpe25 cial Contribution (Temporary Provisions) Law, 1974, (Law55/74) asamendedbyLaw 15/75. In my view, section 51 does not change the situation, once the applicant is not exonerated from UabiUty to pay income tax thereby. 30 Having come to the aforesaid conclusion, it only remains to determine the issue arising out of the claim of the appUcant that even if he was found Uableto pay special contribution under Law 55/74, that would result in discrimination,

Article 28of the Constitution.

35 The question of discrimination and unequal treatment was first dealt with by the then Supreme Constitutional Court in the case of Mikrommatis and the Republic, 2 R.S.C.C. p. 125, where it was stated that it safeguards only against arbitrary differentiation and doesnot exclude 40 reasonable distinctions which have to be made in view "of 137 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) A. Loizou, I. 1977 May 3 NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) A. Loizou, J. the intrinsic nature of things, both as far as equaUty before the law was concerned in para. 1 of Article 28 and discrimination in para. 2 thereof.This principle has since thenbeenreiteratedinthelineofcases. Particular reference may also be made to the case of Matsis v. The Republic

(1969)3 C.L.R., p. 245, where the question of equaUty of treatment regarding mattersof taxation has also been dealt with. Furthermore, as stated in the case of Lehnhausen v. Lake ShoreAuto PartsCo., 35 L.Ed. 2d, 351,by Mr. Justice Douglas at p. 354: "The Equal Protection Clause does not mean that a State maynot drawlines that treat oneclassof individuals or entities differently from the others. The test is whether the difference in treatment is aninvidious discrimination. Harper v. VirginiaBoardof Elections,383 US663,666, 16L. Ed. 2d 169, 86S Ct 1079. Where taxation is concerned and no specific federal right, apart from equal protection, is imperiled, the States have large leeway in making classifications and drawing lines which in their judgment produce reasonable systems of taxation". The tragic events and the disruption of the economyof theisland that resulted therefrom, already referred to,necessitated the enactment of these laws; and the fact that theappUcantbelongsto a different classfrom thepointof viewof terms of employment and employer and the repercussions that the situation prevailing in the island might have on them renders the differentiation made, by requiring them topay contribution under Law 55/74 insteadof 54/74 as other salaried people employed in theRepubhc, asnot amounting todiscrimination andunequal treatment. There exist different circumstances which make the differentiation reasonable, in addition to the fact that salaried peopleunderLaw 54/74 have their contribution deducted at the source, whereas, contributions under Law 55/74 arepaid periodicaUy, which results in somebenefit. There is, therefore, a different treatment for different class of people and a reasonable at that. The fact that the appUcant and people in his category do not enjoy the benefits of Law 50/74, does not, in my opinion, change thesituation.so rendering Law 54/74 unconstitutional as claimed. 138 For aUthe above reasons, this recourse, must fail and is hereby dismissed accordingly. 1977 May 3 MALACHTOS, J.: I have had the advantage of read­ ing in advance the three judgments just dehvered and I mustsay thatI agree with thereasons given by mybrother Judges T. Hadjianastassiou and A. Loizou in dismissing therecourse. NICOS ANASTASSIOU v. REPUBLIC (MINISTER OF FINANCE AND ANOTHER) TRIANTAFYLLIDES, P.:Intheresult therecourse is dismissed; but bearing in mindah relevant considerations we donotthinkthatthisis aproper caseinwhich tomake anorderfor costs against the appUcant. Application dismissed. Nor orderas tocosts. Ί39 A. Loizou, J.

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AI explanation based on the official legal text. Indicative, not a substitute for legal advice.