(1987)1987May6 [PIKiS,J] INTHEMATTER OFARTICLE 146OFTHE CONSTITUTION' MARIOSPATTIHIS, Applicant, v. THEREPUBLIC OFCYPRUS,THROUGH THEMINISTRYOFFINANCEAND/OR THEDIRECTOROFINLANDREVENUE DEPARTMENT, Respondents. (CaseNo. 542/86). Taxation—Immovable property— TheTaxationofImmovable PropertyLaw 24/ 80 asamended byLaw 25/81 ~ Section 7
(3)—Thethreeprerequisitesfor thenght ofrelief thereunder ConstitutionalLaw —Equality—Constitution, Art.28.1 —Section 7
(3)(b)of the Taxationof Immovable PropertyLaw 24/80, asamended by Law25/81 — Distinction between purchasers, who complied with the Sale of Land (SpecificPerformance)Law, Cap 232 andotherpurchasers—Existenceof intrinsic difference between the two classes — Such difference can be properlyheeded byLegislature Sale ofLand—Contract for—The SaleofLand(SpecificPerformance)Law,Cap. 232 —Deposit ofcontractwithLandsDepartment undersaidlaw— Creates anestate inland. 5 \Q Intheyear 1978theCo-operativeCreditSocietyofStrovolossoldtoathird party a flat under the termsof awritten contract.Therightsof thethird party were assigned to the applicant, who was treated thereafter as the effective 15 purchaser. The applicant moved as from that time into possession. The property wastransferred inthe name of theapplicantin 19b3.Inaddition to the purchase pnce the applicantpaid tothevendors£175.,representing the amountspaidbythevendorsfortheyears1980-1986invirtueoftheTaxation ofImmovable PropertyLaw24/80. 20 Theapplicant claimedarefund ofthatamountinpursuancetos 7
(3)ofthe 884 3 C.L.R. Pattihls v. Republic Law(introduced byLaw25/81) Htsapplication wasrejected onthe ground that thecontract ofsalewasnot deposited with theLandsDepartment under the provisionsof theSaleof Land (Specific Performance) Law, Cap 232 5 10 Hence the present recourse Applicant submitted that section 7
(3)(b) is unconstitutional,asbeingcontrary toArt 28of the Constitution Held,dismissingtherecourse
(1)Thethreeprerequisitesoftherelief under section 7
(3)are (a)thepurchasersatisfiestheDirectorthatthetaxclaimed to be refunded was added to the purchase pnce, (
- b)the contract of sale was deposited with the Lands Department under the provisions of the Sale of Land (Specific Performance) Law, Cap 232, and (
- c)the purchaser proves that asa result of theaddition of thetaxtothepurchase pnce, taxadditional tothatwarranted bythe lawwaspaid
(2)Thedismissalofthisrecourseisinevitablebecausenotonlythesecond, but alsotheothertwoprerequisiteswere not satisfied 15 20
(3)This Court has not been persuaded of the unconstitutionality of s 7
(3)(b) The deposit of a wntten contract of sale under Cap 232 createsan estate inland, whereas the nghtsof a purchaser, whohasnot compliedwith Cap 232, are contractual in nature It follows that there is a difference between theposition ofthetwoclassesofpurchasersthatmaybeheeded by the legislature Recoursedismissed No orderastocosts Recourse. Recourse against the refusal of the respondents to refund to 25 applicant tax levied on immovable property paid by his predecessor intitle. D.HadjiNestoras, for the applicant. Y.Lazarou,for the respondents. Cur.adv. vult. 30 PIKIS J. read the following judgment. The grievance of the applicant ventilated in thisrecourse arises from the refusal of the Director, Inland Revenue, to refund to applicant tax levied on immovable property paid by his predecessor m title, the Cooperative Credit Society of Strovolos, hereinafter referred to as 35 «the vendors». The background to the sub judice decision communicated to the applicant on the 18th June, 1986, is the following: In the year 1978 the vendors sold to a third party a flat at 885 PlklsJ. Pattihis v. Republic
(1987)Strovolos under and in accordance with the terms of a written contract. The purchasers assigned in 1980 their rights under the contract to the applicant who was treated thereafter as the effective purchaser of theproperty;and as far asmaybe gathered from thematerialbefore me,theapplicantmovedintopossession. 5 Eventually the property was transferred to the applicant by the vendors in 1986.Inaddition tothe salepricetheapplicantpaid to thevendorstheamount of£175,theequivalentofthesumpaidby the vendors by way of tax for the years 1980-1986.The tax was levied under the provisions of the Taxation of Immovable 10 Property Law, 1980 (Law24/80).Evidently,thevendorspaid the taxinthe absence ofany change inthe ownership ofthe property and soughtitsrecoveryfrom thepurchaserswhowerethepersons enjoying possession of the property at the time taxwas levied. Refund of the amount of £175 was claimed by the applicant 15 pursuant totheprovisionsofs.7
(3)oftheLaw,introduced byway of amendment tothe mainenactment byLaw25/81. Section 7
(3)entitlesthepurchaserofimmovablepropertytoclaimthereturnof tax paid in relation to the property by the vendor provided the following three prerequisites aresatisfied, that is: 20 (a)thepurchasersatisfiestheDirectorthatthetaxclaimedto berefunded wasadded tothepurchase price: (b) the^,contract of sale was deposited with the Lands Department under theprovisionsoftheSaleofLand (Specific Performance) Law;Cap.232;and (c)thepurchaserprovesthaiasaresuhoftheaddition ofthe tax to the purchase price, taxadditional to that warranted by the law was paid. In refusing the application for a refund of the tax, the Director, specified onlyone legal ground for hisdecision, namely*failure to 30 comply with the requisite under (b)above. And the challenge is confined to .the validity of that decision interwoven with the constitutionality of the provisionsofs.7
(3)(b)ofthelaw.Whereas the applicant acknowledges that the decision rests on a proper interpretation oftheprovisionsofs.7
(3)(b),itiscontendedthatthe 35 relevant part of the enactment-is unconstitutional, mainly for breach ordisregard oftheprinciple of equalitybefore thelawand the Administration safeguarded by Article 28. Counsel for the Republic likewise confined his submission to support of the constitutionality of theimpugned provision ofthelawand argued 4Q 886 25 3 C.L.R. Pattihls v. Republic Plkis J . that itgoes nofurther than makingadistinction that was perfectly competent for the legislature to make having regard tothe width of itsclassification powers inmattersof revenue laws. Independently of the constitutionality of the provisions of s. 5 7
(3)(b) of the law,the recourse isdoomed to failure, forthe claim forrelief waswhollyunfounded. Notonlythepre-conditionsetby s. 7
(3)(b) wasnot satisfied, but the other two prerequisites of that subsection were notsatisfied either. Firstly,thetaxwasnot added tothesaleprice:therefore, thefirstconditionforreliefwasnotmet. 10 The amount of £175 representing taxwas not added to the sale price but paid directly to the vendors, seemingly because the parties took the view that the purchaser was liable to refund the money to the vendors. Secondly, there isnothing tosuggest that the tax levied was above that envisaged by the law, the 15 prerequisitesetforth bys.7
(3)(c)ofthelaw.Onthecontrary,asfar as we may infer, the tax raised was none other than the amount justified under the law. Inmyjudgment the application for refund was from the outset misconceived. The recourse must, necessarily, fail. 20 I"viewofthe inevitabilityofdismissaloftherecourseitisstrictly unnecessarytodebate,and farmoreso,giveadefinitive answerto thequestion oftheconstitutionality oftheprovisionsofs.7
(3)(b)of the law. However, as this was the only issue canvassed in argument I may venture an opinion on that aspect of the case as 25 well.1inclinetotheviewapplicantcannotsucceedonthat ground either. Section7
(3)(b)postulatesdepositofthecontractofsalewiththe LandsDepartment inaccordance withthe provisionsof Cap. 232 as one of the three essential requisites for a refund of tax. The 30 question that must be answered iswhether the distinction made between written contracts lodged with the L.R.O. and contracts not so deposited is arbitrary in the sense that it involves a differentiation unrelated to inherent or specific differences between the objects distinguished. Wide discretion resides, as 35 acknowledged, in the legislature to make classifications deemed necessaryfor the promotion of the objects ofthe lawaswellasits efficacious enforcement. The deposit ofa written contractof sale with the LandsDepartment createsan estate inland,whereasthe rightsof apurchaser whohas not complied with theprovisionsof 40 Cap. 232 are merely contractual. Therefore, there isa difference 887 Pikis J . Pattihls v. Republic
(1987)between the position of the two classes of purchasers that could properly be heeded by the legislature in the establishment of the rights and obligations of the two classes of purchasers. The distinction isalsoseeminglydesigned toobviatepossibledisputes aboutthedateofexecution ofthewrittenagreementandmakefor 5 theeasyapplication ofthelaw.Whetherthisisaproperground for fnaking a distinction I need not presently decide. I remain unpersuaded, as indicated, that s. 7
(3)(b) is unconstitutional for breach of theprovisionsof Article28. 10 Inthe result, the recourse isdismissed. Recourse dismissed 888