(1987)1987 February 7 [P1K1S J ] INTHE MATTER OF ARTICLE 146OF THE CONSTITUTION SYNEKLIMITED, Applicant, ν THE REPUBLICOF CYPRUS,THROUGH 1 THE MINISTEROF FINANCE, 2 THE COMMISSIONER OF INCOMETAX, Respondents (CaseNo 144/86) 'ncome Tax—The Income TaxLaws section 8(x)—The exemption of 3%is confined toforeignexchangeactuallyimported Construction of Sta'utes—Purposive interpretation—No room for such interpretation :fobjects of the lawaresuccinctlydefined—Section 8(x)of the Income TaxLaws Constitutionalityof Statutes—Presumption as to their constitutionality—In the absence of achallengeastotheconstitutionalityof astatute, the Courtcannot probe into the mattet of itsconstitutionality The applicants entered into a contractual arrangement with German manufacturers whereby thelattersupplied themwith raw matenalwithwhich 1 0 the applicants made garments, which they re-exported to the German suppliers Property inthe matenal remained throughout with the German suppliers, th.*contribution ofthe applicants being confined tothesupply of the work necetsary to finish the product The applicants never paid for the value oftheimportedmatenal Theysimply creditedthesuppliers with it The 1 5 only money passing between thesuppliers andtheapplicantswas anamount equal to thework rendered by theapplicants for theconversion of the matenalas aforesaid The respondent determined that the applicants were entitled to the 3 % exemption from income tax allowed by section 8(x)ofthe IncomeTax Laws 2 0 with respect tothe foreign exchange actually imported by the applicants As theapplicants didnot agree, claiming that the deduction should be granted forthe entire value ofthe goods exported, despite the amountof foreign exchange actually imported,they filed thepresent recourse 162 5 S C.L.R. Synch Ltdv. Republic 5 Counsel for the applicants submitted that section 8(x)should be liberally construed Inordertogiveeffect tothebroaderobjectivesofthelegislatureto provide incentives for the export trade. She further submitted that hteralk construed it may result in injustice by discriminating against persons mtit. position oftheapplicantsorsimilarly circumstanced. 10 Held, dismissingtherecourse:
(1)Section 8(x)specifically limitsihepower oftherespondenttoforeignexchangeactuallyimported.Thereisnoroomf01 a purposive interpretation whenever the objects of the taw are succinctly defined, as in this case. The administration had no discretion to make a notionaladjustment oftheamount of foreign exchange imported. 15 (2} Failingasubmission ofunconstitutionalityofalawthedutyoftheCourt is to apply it. Statute laws are deemed to be constitutional, unless then constitutionalityisspecifically challenged andthenestablished beyond doubt thatthe lawInquestionisrepugnantorinconsistentwiththeConstitution.As inthiscase no such challenge was made theCourt cannot probe aquestion of constitutionality ofs. 8(x). Recoursedismissed No orderasto costs Casesreferredto: 20 Georghiadesv.TheRepublic
(1982)3 CLR 659, Marathovouniotisv.Theodotou
(1982)1 C.L.R 35, TheBoard forRegistration of Architectsand CivilEngineers v. Kynaktde*
(1966)3C.L.R.640; Matsis v. TheRepublic
(1969)3 C.L.R.245. 25 Recourse. Recourse against the decision of the respondents whereby exemption from income tax was allowed only in respect tothe foreign exchange actually imported representing applicants remuneration fortheworkandservices rendered totheGerman 30 suppliers of the raw material with which the applicants made garments. A. Vassiliou(Mrs.), fortheapplicants. A Evangehu, Senior Counsel of the Republic, for the respondents. Cur. adv. vult 35 PIKISJ. readthefollowingjudgment.SYNEKLtd.,applicants trade in the making of garments and related products. Thev 163 Pikis J. Synek Ltdv.Republic
(1987)entered into a contractual arrangement with German manufacturerswherebythelattersuppliedthemwithrawmaterial with which SYNEK made garments, seemingly according to specification, thattheyre-exported totheGerman suppliers.The contribution of SYNEK to the finished product consisted of the 5 provision of labour and the capital outlay necessaryto run their workshop orfactory. Notwithstandingsomeconfusion aboutthe terms under which the trade between suppliersand makerswas conducted,thefactsemergedfairlyclearlyaftertheinquirymade by the Administration to ascertain the facts relevant to the sub 10 judicedecision.Theconclusionsreached,reflectedinthefindings oftheCommissioner, werereasonablyopentotherespondent, if not inevitable. The relevant finding is that the material was imported exclusivelyfor thepurpose ofbeingturnedthroughthe manufacturingprocessintogarmentswithaviewtore-exportation 15 to the German owners. Property in the material remained throughoutwiththeGermansuppliers,thecontributionofSYNEK being confined tothe supply ofthe worknecessary to finish the products. Evidence ofthefact that ownershipremained withthe Germansupplierswasalsoforthcoming fromtheinsuranceofthe 20 goodsbythem againstprobablerisks.Theapplicantsneverpaid for the value of the imported material; they merely credited the supplierswiththevalueoftherawmaterialthattheysubsequently setoff againstthevalueofthefinished products.Dutypaidonthe importation of the raw materialwasdulyrefunded, according to 25 standard-procedure, when thematerialinitsconverted formwas re-exported. The only money passing between the German suppliersandtheCypriotmanufacturers wasanamountequalto theworkrenderedbytheapplicantsfortheconversionoftheraw materialintogarments. 30 The elicitation and ascertainment of the facts pertinent to administrative action isthe province of the Administration.And •incometaxcasesarenoexception-see,interalia,Georghiadesv. Republic*. Judicial reviewisconfined toscrutinyofthelegalityof administrative action, designed toensurethattheAdministration 35 operates within the bounds of the law and duly heeds the standardsofsound administration. Guided by the factual substratum outlined above, the Commissionerdeterminedtheapplicantswereentitledtothe3% •
(1982)3C.L.R. 659(F.B.). 164 3C.L.R. Synek Ltd v. Republic Pikis exemption from income tax allowed by section 8(κδ)*, only wi respect to the foreign exchange actually imported representir their remuneration for the work and services rendered to tl German suppliers Applicants challenged the decision as inva! 5 onaccountof misapplicationof therelevant provisions of thelav The contentionadvanced on behalf of the applicants before tf Court, earlier rejected by the Commissioner, was thatexemptic from income tax should be granted for the entire value of tl· goods exported despite the amountof foreign exchange actual 10 imported First, it is difficult to reconcile applicants' interpretation < section 8 (κδ) with the plain provisions of the enactment,th specifically limit the power of the Commissioner to allowing reduction only for the foreign exchange in fact imported Thela 15 specifically provides thatrelief from income tax is confined to th foreign exchange infact imported Nontheless,counselsubmittei we should interpret liberally the provisions of section 8(κι meaning, as Iperceive her submission, that we should constn purposively the provisions of the relevant enactmentin order 20 give effect tothe broader objectives of the legislature, namely, provide incentives for the export trade Apurposive interpretatic may, no doubt, be adopted** where the objectives sought to \ achieved by individual provisions of the law are not clearly spc outtherein,inwhich case thegap maybe filled by reference totl 25 wider objects of thelaw But, there is noroom for suchapproa< whenever the objects of the law are succinctly defined in ti relevant section,as inthis case Inaccordancewith section 8 (κ relief is confined to foreign exchange actually imported There no discretion intheAdministration tomake a notional adjustme 30 of the amountof foreign exchange imported Therefore,giventl facts of the case there was no amenity in the Commissioner allow relief for any amountinexcessof foreign exchange actual imported Further, counsel complained that literally construed the lav 35 may result in injustice by discnminating against persons in th position of the applicants or similarly circumstanced In th absence of specific submission thattheprovisions of section8(κί 'Section 8(x)inthetngltshtranslation *'See interaha Marathovoumotisν Theodotou
(1982)JCIR 35 165 PtkisJ. Synek Ltdv. Republic
(1987)are unconstitutional forincompatibility orinconsistency withthe provisions of Art. 28ofthe Constitution, safeguarding equality before the law and the Administration, we cannot probe a question ofconstitutionality. Itisanaxiom ofconstitutionallaw that statute laws are deemed tobe constitutional* unless their 5 constitutionality isspecifically challenged andthen established beyonddoubtthattheyarerepugnanttoorinconsistentwithone or more provisions oftheConstitution. Failing a submissionof unconstitutionalitythedutyoftheCourtistoapplythelawaslaid downbythelegislature.Certainly!shallnotspeculateonwhatthe 10 fateofasubmissionofunconstitutionalityofS.8(K5)mightbe;save to remind that in matters of taxation wide discretion is acknowledged to the legislature .to make the classifications deemed necessary for the promotion of the objects ofthe law**. Intheresulttherecoursefailsanditisdismissed.Thesubjudice 15 decisionisconfirmedpursuanttotheprovisionsofArt.146.4(a)of theConstitution.Therewillbenoorderastocosts. Recoursedismissed. Noorderastocosts. See. interalia. TheBoardforRegistration ofArchitects and CivilEn&neers v. Chr. Kynakdes
(1966)3C.L.R. 640(F.B). •See. interalia,AndreasMats*v.Republic
(1969)3C.L.R 245(F.B.). 166