clr/1988/1988_1_122.pdf

(3)—ItdoesnotoffendtheprovisionsofArt. 24.4noris 10 itapunishmentinthesenseofArt. 12.3. Constitutional Law—Punishment—Constitution, Art. 12.3 — Additionalchargeimposedbyreasonofnonpaymentoftax—The SewageandDrainageLaw1/71,asamendedbyLaw15/78,section 30

(3)—ItdoesnotimposeapunishmentinthesenseofArt. 123. 15 The plaintiffs-respondents are the Sewage Board of Nicosia, a Corporation of Public Law established under the Sewage and DrainageLaw,1971(LawNo.1/71). 1 Theplaintiffsinvirtueoftheirpowersundersection30{l){b)ofthe LawandtheNicosiaSewageRegulations1973,(regulations32,33, and34)imposedthreemilssewageratesoneverypoundofassessed valueregisteredorrecordedinthebooksoftheD.L.O.fortheyears 1977, 1978, 1979and 1980ontheimmovablessituatedwithinthe area of the Board whichcouldbeservedbytheSewageSystemof theBoard. 122 20 25 1 CL-R. Lotzouv.SewageBoardN**!a 5 By virtue of Section 30

(3), as amended by the Sewage and Drainage (Amendment) Law, 1978 (Law No. 15/78), every person who does not pay the rate due within the prescribed period of payment is bound to pay additional charge equal to 20% of the unpaid rate or fee. 10 As the appellant refused or failed to pay the aforesaid rate, the Board brought an action against her and obtained judgment for £85.200 milssewage ratesand£17.400additional charge.Hencethis appeal. The appellant raised the issueofconstitutionality of sections 30(l)(b) and30

(3). Held, dismissingtheappeal:

(1)The burden ofproof iscaston the partywhochallengestheconstitutionalityofthe Law. 1 15 20 25 30 35 40

(2)Appellant' s complaint is that the sewage rates are uncertain •and destructive, as there is no limitation of the period this taxation would continue tobe imposed and the tax payer isnot ina position toknowfor howmany yearshewillbe burdened withthese rates

(3)The rates in this case are plainly a tax.They are a compulsory exaction of money by a public authority for public purposes, enforceable byLawand isnota payment for servicesrendered The amount, time and place of payment, are made known annually by the publication ofthe decision of the Board inthe Official Gazetteof the Republic.The taxiscertain forevery year. The principle of certainty in the tax is in contradistinction to arbitrary and uncertain tax.What-isrequired tobecertainisthetime and mode of payment and the amount payable.Thisprinciple does not emanate from paragraph 4ofArticle 24 of the Constitution, but from the requirement of certainty of the Law under the authorityof , which tax is imposed. (See paragraph 2 of Article 24 of the Constitution). The contested legislation does not go against the above requirements of certainty. Itiscertain thatan owneroroccupierofimmovable propertywithin the prescribed areas of the Sewage Board is liable to pay this taxthe sewage rates - annually. Uncertainty in the period of years for which thisannual tax ispayable does not make a Law repugnant to or inconsistent withthe provisions ofthe Constitution.

(4)The payment of the additional charge is dependent on the objective criterionofnon paymentand notonanysubjective criteria or the non payment for no reasonable cause.Thisdoes not offend the provisions of Article 24.4 of the Constitution, nor is it a punishment inthesense ofArticle 12.3oftheConstitution. Itisina 123 Lofaouv.SewaeeBoardN**ta

(1988)senseonlyasanctionprescribedbyLawinordertopromptthetax payerto pay intime,amatter conducivetoproperadministration, taking cognizance of all burdens cast on public revenue by non punctualpayment.

(5)Inanyeventandwhateveritsnatureis,theadditionalchargein questionisnotofsuchmagnitudeastobeconsidered ofdestructive orprohibitivenature. 5 Appealdismissedwithcosts. Casesreferredto: The Board for Registration of Architects and CivilEngineers v. 10 Kyriakides

(1966)3C.L.R. 640; Georghallidesv. TheVillageCommissionofAy.PhylaandAnother, 4R.S.C.C.94; Constantinidesv. TheElectricityAuthorityofCyprus

(1982)3C.L.R. j ^ 798; ApostolouandOthersv.TheRepublic

(1984)3C.L.R. 509; LamiGrovesLtd. v.TheRepublic

(1986)3C.L.R.2378; KantaraShippingLimitedv. Republic

(1971)3C.L.R.176; Istambouli Bros. v. Director Department of Customsand Excise

(1986)1 C.L.R.465. 20 Appeal. Appeal by defendant againstthejudgment of the District Court ofNicosia (N.Nicolaou, D.J.)datedthe 1stJuly, 1983(ActionNo. 3500/81)whereby she wasadjudged topay£85.200sewage rate and £17.400 additional charge. 25 L.Clerides,for the appellant. K.Michaelides, for the respondents. Cur.adv. vult. TR1ANTAFYLUDES P.: The Judgment of the Court will be delivered byMr.Justice Stylianides. STYUANIDES J.: The plaintiffs -respondents are the Sewage Board of Nicosia, a Corporation of Public Lawestablished under the Sewage and Drainage Law, 1971 (LawNo. 1/71). 124 30 1CL.R. Loizouv.SewageBoardN*sia StyUanJdesJ. The defendant was at all material times the owner of building sitessituatedwithintheareaoftheSewage Board,whichcould be served by the Sewage System of Nicosia. The said plot is registered in the name of the defendant by virtue of Registration 5 No. C128 and it isshown on D.L.O. maps as Plot 123 of Sheet/ Plan XXI/54.6.H, Block C. Itsassessed value inthe D.L.O. books ofNicosia was£7,100.-. The plaintiffs invirtue of their powers under section 30(l)(b)of the Lawand the Nicosia Sewage Regulations 1973, (Regulations 10 32,33 and34)imposed threemilssewageratesineverypound of assessed value registered or recorded inthe books of the D.L.O. for the years 1977, 1978, 1979 and 1980 on the immovables situatedwithinthearea oftheBoardwhichcouldbeservedbythe Sewage System of the Board. The imposition of these rates for 15 each year, the time and place of payment were published in the Official Gazette of the Republic, under Notification 333 for 1977, Notification 1/78 for 1978, Notification 1/79 for 1979, Notification 305/79 for the year 1980 respectively -(see Exhibits 1,2,3 and4).Thusthesewageratesfortheyears1977-1980, both 20 inclusive, for buildingsitePlot 123totalled£85.200 mils.Besides thesaid official notifications, the time and place of payment were broadcasted on the radio and the T.V. and the rate payers were called to pay same not later than the times appointed inthe said notifications. The appellant failed and/or refused to pay any 25 amount. By virtue of Section 30

(3), as amended by the Sewage and Drainage (Amendment) Law, 1978 (Law No. 15/78), every personwhodoesnotpaytherateduewithintheprescribed period of payment isboundtopayadditional chargeequalto20% ofthe 30 unpaid rate or fee. Both the rate and the additional charge are paid, under the Law, intothe Fund of the Board for the purposes of the Board assetout inthe Law. The Board instituted action against the appellant to recover these amounts. 35 The trial Court issued Judgment against the defendant adjudging her to pay £85.200 mils sewage rates and £17.400 additional charge. Hence thisappeal. Twogroundsoftheappealwere pursued: 40 1. That Section 30(l)(b) is unconstitutional, as it imposes taxation, the nature ofwhich isdestructive, becausesuch taxation 125 StyUanidesJ. Loizouv.SewageBoardN'eia

(1988)is uncertain and, therefore, contrary to Article 24.4 of the Constitution;and 2.ThatSection30

(3),whereby theadditionalcharge is imposed inthe case of nonpayment,is unconstitutionalonthegroundthat it is destructive, because the additional charge is payable irrespective of whether thenonpayment was due toa reasonable cause, andbecause of itsmagnitude. 5 Paragraph 4 of Article 24 of theConstitutionreads as follows:«Notax, duty orrateof anykindwhatsoever otherthan customs duties shall be of a destructive orprohibitive nature.» 10 It is well settled that no act of legislation will be declared void except in a very clear case, or unless the act is unconstitutional beyond all reasonable doubt.Thisrule isexpressed inanother way thata Law ispresumed tobeconstitutionaluntilproved otherwise beyong all reasonable doubt. The burden of proof is cast on the 15 party who challenges theconstitutionalityoftheLaw - (TheBoard for Registration ofArchitects and CivilEngineers v. Christodoulos Kyriakides

(1966)3 C.L.R. 640). The material part of section 30

(1)of theSewage and Drainage Law, 1971, reads:- 2 0 «30-1 Τηρουμένων των διατάξεων τ ο υ παρόντος Νόμου, τ ο Συμβούλιον κέκτηται εξουσίαν όπως, εντός των ορίων τ η ς περιοχής τ ο υ ,επιβάλληκαι εισπράττη διά τ ο ι α ύ τ η ν χρονικήν περίοδον και κατά τοιούτον τρόπον, ως ηθελεν εκάστοτε καθορισθή ^5 (α)

(8)εν τέλος επί των ιδιοκτητώνή κατόχων ακινήτου ιδιοκτησίας, οίτινες εξυπηρετούνται ή μέλλουν να εξυπηρετηθώσιν....» •30

(1)Subject to the provisions of this Law, the Board has 30 power, within the area, toimpose and collect for such period of time and in such a manner, as may be fixed for the time being (

1. a)(
2. b)A rate on the owners or occupiers of immovable 35 properties, which are ormay be served ». 126 1CX.R. Lotzoav.Sewage Board N'sla StyUantdea J . Sub-section 2 restrictsthe height of the rates.Theyshould be determinedinsuchawaysothattheannualincometherefromand revenue from other sources to be sufficient only to meet the expenditures for the carryingoutofthedutiesand obligationsof 5 theBoard,includingthepaymentoffofinterestandcapitalofany loan contracted or bonds issued for works necessary and for a reserved fund for extensions, renovations, depreciations and otherobjectsofsimilarnature. Theratesaredetermined annuallybytheBoard.Theycannot 10 exceed acertain arpount inthepound oftheassessedvalueand thetimeandplaceofpaymenthavetobenotified bypublication intheOfficial Gazette. ThecomplaintofMr.Cleridesagainstthisstatutoryprovisionis thatthesewageratesareuncertainanddestructive,asthereisno 15 limitationoftheperiodthistaxationwouldcontinuetobeimposed andthetaxpayerisnotinapositiontoknowforhowmanyyears hewillbeburdenedwiththeserates. Theratesinthiscaseareplainlyatax.Theyarea compulsory exaction of money by a public authority for public purposes, 20 enforceable byLawand isnota paymentforservicesrendered. (See HansE. Georghallides v. The Village Commissionof Ay. Phyla&Another,4R.S.C.C.94,atp.97;AleccosConstantinides v. The Electricity Authority of Cyprus

(1982)3 C.L.R. 798; Apostohu andOthersv.TheRepublic

(1984)3C.L.R.509;Lami 25 GrovesLtd. v.TheRepublic

(1986)3C.L.R.2378.) The Sewage and Drainage Law, 1971, was enacted for the establishmentofBoards,thefunction ofwhichistheconstruction ofSewageandDrainageSystemsforthebenefit, primarily,ofthe owners of immovable properties within the areas of the Board. 30 Thefunction anddutiesofsuch Boards,assetoutintheLaw,are torenderessentialservicesforthehealthandamenitiesoflifein thoseareas.Theownersoroccupiersofimmovableproperty,who areserved,orcanbeservedbysuchSewageorDrainageSystems, orarebenefited.or shall,ormaybebenefited, arethetaxpayers 35 underthisLaw. Afeeisprovidedinsection30(l)(c)which,however,relatesto the use of the Sewage System on the basis of the water consumptionbytheowneroroccupierofimmovableproperty. 127 StyOanideaJ. Lolzouv.SewageBoardN'ela

(1988)The amount, time and place of payment are made known annually by the publication of the decision of the Board in the Official Gazette of the Republic.The taxiscertain for every year. The principle of certainty in the tax is in contradistinction to arbitrary and uncertain tax. What is required to be certain isthe 5 time and mode of payment and the amount payable. This principle does not emanate from paragraph 4 of Article24 of the Constitution, but from the requirement of certainty of the Law under the authority of which taxisimposed. (See paragraph 2 of 1 n Article24 ofthe Constitution). The contested legislation does not go against the above requirements of certainty. It is certain that an owner or occupier of immovable property within the prescribed areas of the Sewage Board isliable to pay thistax -the sewage rates -annually. Uncertainty inthe period of 15 years for which this annual tax ispayable isbeyond the dictates and scope of the constitutional provision.The alleged uncertainty is not a ground of unconstitutionality and does not make a Law repugnant to or inconsistent with the provisions of the „ n Constitution. InourtaxationsystemtherearemanyLawswhichempowerthe impositionofannualtaxwithnolimitationastotheperiodthatthe taxistobe imposed. With regard to the second ground the argument was that this additional charge of 20% isimposed irrespective offailure topay 25 for a reasonable cause and that in view of its magnitude is of destructive nature. The additional charge is fixed by the challenged legislation at 20% in case of non payment attheprescribed times. The additional amount ispaidintothe Fundofthe Board tobe 30 usedforthepurposesoftheBoard.Thepaymentofthisadditional charge is dependent on the objective criterion of non payment and not on any subjective criteria or the non payment for no reasonable cause. The tax payer is charged with this additional burden for thesole reason of nonpayment attheprescribedtime. 35 This does not offend the provisions of Article 24.4 of the Constitution, nor isita punishment inthe sense of Article 12.3of the Constitution. Itisinasense onlyasanction prescribedbyLaw inordertopromptthetaxpayertopayintime,amatter conducive to proper administration, takingcognizance ofallburdens caston 40 public revenue by non punctual payment. 128 1 C.L.R. t o i z o u v.Sewage Board N'sla Styflanldes J . In Hans'E. Georghallides v. The Village Commission of Ay. Phyla & Another, 4 R.S.C.C. 94, at p. 97 it was said that the requirement of sub -section 4 of section 9 of Cap. 287, that the additional amount collected under sub - section 3 of the said 5 section shall form part of the public revenue does notrender such additional amount afine asitisclearlyintentedtomeetthe burden cast upon the administration bythe arrears and their collection. In Kantara Shipping Limited v. Republic (Directorof Inland Revenue)

(1971)3 C.L.R. 176, it was held that the surcharge 10 provided forinsection 8

(1)oftheTaxCollection Law, 1962,isnot in reality a «tax»but exactly what isdescribed asbeing in the said provision, in other words a «surcharge», the purpose of which is nottoimpose anincreaseordisproportionate taxinany particular case but to compensate the public funds for the extra expense 15 involved in the existenceand functioning of a state machinery for the collection of overdue taxes of various kinds. The power oftheTaxingAuthority toimpose additional charge in default of payment of a tax is well recognized. The tax payer normallyisburdened notonlywithinterestsonhisunpaidtax,but, 20 also, additional charge. These additional charges, including interest, are the result of the failure of the citizen to perform his duties towards the State or a Corporation of Public Law - (see Kyriakopoulos, Greek Administrative Law, 4th Edition, Part C.p. 353). 25 Asimilar approach istobe found inStassinopoulos Discourses on PublicFinance Law,3rd edition, 1966,p. 292. Along these lines one may see the approach of this Court in Istambouli Bros., v. Director Department of Customs & Excise

(1986)1C.L.R. 465,inwhichtheforfeiture of goodsbrought into 30 the Republic in violation of the relevant Customs legislation was considered as an administrative measure and not as punishment that infringes Article 12.3ofthe Constitution. Inanyevent and whatever itsnature is,the additional chargein questionisnotinourviewofsuchamagnitudeastobe considered 35 of destructive or prohibitive nature. Forthe foregoing reasons thisappeal isdismissed with costs. Appeal dismissedwithcosts. 129