clr/1988/1988_3_1155.pdf

(1987)3CS.H.495 adopted. Taxation—CapitalGains—TheCapitalGainsTaxLaw,1980(Law5211980), section 23—Refundofoverpaid tax—Taxpaidinrespect ofcompulsory acquisitionofimmovableproperty—Paymenteffectedbydeductingit from thecompensationpayablefor theacquisition—Compensationfor suchacquisitionexemptedbya law(Law148/85) enactedafterpaymentoftax from all taxes—Retrospectivity of such law—Whether amountof tax shouldberefundedundersection23orpaidaspartofthecompensation undertheCompulsory Acquisition of Property Law—First alternative adopted—Kythreotisv.TheRepublic

(1987)3CLK. 495 adopted. 1155

(1988)Hadjialexandrou v. Republic Theissues inthisrecoursesufficiently appear from thehereinabovenotes. Recoursedismissed. Hoorderasto costs. Casesreferredto: Kythreotis v.TheRepublic

(1987)3C L R .

1. Recourse. Recourseagainstthedecisionof therespondents toimposethe sum of £4,000.- as capital gainstaxrepresenting thedisposalof applicant's immovablepropertyatK.Paphos. P. PhilippoUyfor theapplicant. •->Q Y.Lazarou, for therespondents. Cur. adv. vult. A. LOIZOU P. read the following judgment. The applicant was theownerof ImmovablepropertyunderReg.Nos2722and 2723 at Kato Paphos which were on the 25th February 1981, 15 gifted to her son-in-law Stephanos Manoli and alsoof property under Reg. No. 2729 at Paphos which was compulsorily acquired by the Republic on the 30thJuly 1982.Both the gift and thecompulsory acquisition wereconsidered byrespondent 1,to represent disposals of property asprovided by section 10of the 20 Capital GainsTaxLaw, 1980(LawNo52of 1980)- hereinafter tobereferred toastheLaw-andthusattractingcapitalgainstax, prior to the enactment of the Compulsory Acquisition (Amendment) Law 1985(LawNo. 148of 1985). On the 10thNovember,-1984, theapplicant wasrequested by respondent 1,tosubmitcapital gainstaxreturnsfor thedisposals made bygift andthecompulsory acquisition,asprovidedbysection 12of the Law. On the 11th December 1984, the applicant 1156 25 3C.L.R. Hadjialexandrou v.Republic A.LoizouP. submitted suchreturnsfor thepropertiesdisposedof whichdid not show any capital gains tax liability. (Appendices "A"and "B"). 5 Chithe 13thDecember 1985,respondent 1,handed totheapplicantNoticesof Assessment for capitalgainstaxshowingthe following amountsoftaxpayable.(Appendices"C"and"D"). For the properties gifted £1000 tax plus 9% interest from 25.5.
2. Forthepropertycompulsorily acquiredbyGovernment£3000 10 taxplus9%interestfrom 30.10.1982 Total£4000 Theapplicantwasalsoinformed thatthesaidtaxwouldbecollectedbytheDirectoroftheDepartmentofLandsandSurveys, thatshecouldobject tosuchassessments,if shewishedandthat
3. fmalization of herliability could bemadethereafter andif any amountappearedtohavebeencollectedinexcess,itwouldberepaid toherwith interest,asprovided bysection 23of theLaw. Theapplicantdidnotobject tosuchaprocedureandhadin fact acceptedonthe 19thDecember 1984,themoneypaidtoherby 20 respondent 2after deductionof alltaxesduebyher,reservingat thesametimeherrighttochallengeinCourtboththeassessment andthedeductionofthetax.(AppendixE). Asaresultoftheaboveonthe 18thDecember 1984,respondent 1,addressed a letter torespondent 2 by which hewasre25 questedtodeductanamountof£5361.99from thecompensation whichwastobepaidtotheapplicant,whichwaspayablebyher bywayoftaxesandinterest(AppendixE). 30 Onthe28thJanuary, 1985,theapplicantobjectedonlyagainst thecapitalgainstaxassessmentsandtheonlyreasonofobjection statedthereinwasthattheassessmentswereexcessiveandparticularlythatthemarketvalueofthepropertiesasat27thJune1978 1157 A.LoizouP. Hadjialexandrou v.Republic

(1988)were £15000.- for the properties covered by each assessment, (Appendix "C"). Therewasnoclaimforrepaymentofanyinterest. On the 19th June, 1985,respondent 1proceeded and determined theapplicant'sobjections againstthecapitalgainstaxas- 5 sessments and issued to the applicant Notices of Assessment, (Appendices "H"and "I"),under which the following amounts becamerepayableandwereinfactrepaid byvoucherissuedon the20thJune1985: Assessmentreference Tax Interest Total £ £ £ 1000 22.93 1022.93 400 9.17 409.17 £1400 £32.10 £1432.10 10 Subsequently in 1985the Acquisition of Property (Amendment)Law, 1985,(LawNo. 148of 1985),wasenactedwhereby thecompensationpayableonpropertycompulsorilyacquiredwas exemptedfromalltaxes.Suchprovisionwasgivenretrospective effect asfromthe27thMay,

1. 15 Asaresultof theenactmentof Law No.148of 1985, respondent 1,decidedthatinviewof the retrospectivityofsuchlawthe capitalgainstaxandinterestthereonwhichwerecollectedbyhim should berefunded totheapplicantinaccordancewiththeprovisionsof section 23of the CapitalGainsTaxLaw 1980,withinterest on the amount of thetax at 9%asfromthe 18thMarch, 1986, thatis, threemonthsafter suchtaxhadbeencollected.Respondent 1, informed the applicant of the above decision by means of his letters of the 22nd February 1986 and the 13th March, 1986(Appendices'A andB, respectively). 20 1158 25 3 C.L.R. 5 0 ^ Hadjialexandrou v. Republic A. Loizou P. After receiving the aforesaid letters the applicant filed the present recourse.Though theprayer for reliefis drafted inarath­ ervaguemanneritcanbegathered therefrom thatthemainprayer of theapplicant is thattheamounts which werecollected by respondent 1,should notberepaidby himundertheprovisions of section 23 of theaforesaid Law, andundersection 38of the As­ sessment and Collection of Taxes Laws, 1978-1979, under which respondent 1 haslegalauthority torepay taxescollected by him,butinstead thattheamountsduetohershould berepaid by respondent 2,theDirectorof theDepartmentof Lands and Sur­ veysby virtue of theprovisions of TheCompulsory Acquisition (Amendment)Law 1983 (Law No.25 of 1983), as amended by Law No. 148 of
2. Thereasonsfor which the applicant re­ quests such anactionarethecollection ofinterest for certainperiodsof timeandoncertainamountsfor which nointerestmay be repaid by respondent 1,as thelaws administered by himdonot empower himtodoso. Inviewof what appears intheprayer forrelief,theopposition andtheaddresses madeonbehalf of theparties,theessential que•0 tiontobedecidedinthisrecourse is whetherrespondent 1, could apply theprovisions of section 23of theLaw onrefunding to the applicant the tax and interest collected on the 19th December
3. Section 23of theLaw reads asfollows: "
4. Εάν αποδειχθήκατά τρόπον ικανοποιούντατον Διευθυντήν,ότιπρόσωποντι κατέβαλεφόρονυπερβαίνον­ τατοποσόντουφόρουτουορθώςεπ'αυτούεπιβλητέου,το πρόσωπον τούτο δικαιούταιόπως τω αποόοθήτο ούτω καθ'υπερβολήνκαταβληθένποσόνομούμετάαπλούτόκου προς εννέατοις εκατόνκατ1έτος απότηςπαρόδουτριών μηνώναπότηςημερομηνίαςτηςπληρωμήςτουκαθ' υπέρβασινπληρωθέντοςφόρουμέχριτηςημερομηνίαςτηςαπο­ δόσεως." ("
5. Ifitbeproved, tothesatisfaction of theDirector,that 1159 A.LoizouP. Hadjialexandrou v.Republic

(1988)apersonhaspaidtaxinexcessoftheamountwithwhichheis properlychargeable,thatperson shallbeentitledtohavethe amountsopaidinexcessrefunded tohim,togetherwithsimpleinterestattherateofninepercentumperannumfrom the expiry of three monthsfromthedateof payment of thetax 5 paidinexcessuntilthedateofthe refund."). Learnedcounselfortherespondentssubmittedthattheanswer tothequestion isgiveninthecaseofKythreotisv.TheRepublic

(1987)3C.L.R.495 the facts of which were on all fours with thiscaseandinwhichSawides,J.}saidthefollowing atp.502:- JQ "Bearinginmindthelegalpositionasabove,theDirectorof InlandRevenuecouldonlyactinthecircumstancesunderthe provisionsof section23ofLaw52/80,andbyvirtueofsuch provisionhewasnotentitledtorefund anyotheramountinex-• cessofwhatisprovidedtherein.Itherefore find thatthedeci- 15 sionoftherespondentwascorrectandinaccordancewiththe relevantlaw." Iagreefully withtheapproachofmylearnedbrotherinthatrecourse. Section23oftheLawauthorizestheDirectorofInlandReve- 20 nuetopayinterest attherateandfromthedatespecified therein andnothingmore.ItcontravenesnoprovisionoftheConstitution andanyonehavingaclaimfordamagesbeyondthatamountcan verywellfallbackincasethereisanannullingjudgmentofthis CourtunderArticle 146oftheConstitution,toparagraph6there- 25 oforincaseofanunlawful actoromissioncausingdamagecommitted in theexerciseorpurportedexerciseofthedutiesof officers or Authorities of theRepublic,totheprovisions of Article 172oftheConstitution. Had Idecided otherwiseandruledthatsection23of theLaw 30 wasinapplicable tothefactsofthiscaseIwouldhavebeendenyingtheapplicantofhisrighttointerestprovidedthereby.Moreover there wasnothing tobedoneby theacquiringAuthority as 1160 3 C.L.R. Hadjialexandrou v. Republic A. Loizou P. thiswasapure.caseoftaxpaidinadvance,andatthat,rendered soonaccountof theretrospectivity given totheamendingLaw No. 148of 1985. 5 lO Needlesstosaythatthetaxwasproperlyleviedinaccordance withthelegislationinforce atthematerialtime,thatthe repaymentofsuchtaxtotheapplicantwasgovernedbythelawunder whichitwaslevied,andinparticularundertheprovisionsofsection 23thereofwhereby(a)thepaymentofinterestisconfined to thetaxpaidinexcess(b)nointerestisallowableonrefundsofinterestand(c)theinterestonthetaxpaidinexcessispayable from theexpiryofthreemonthsfromthedatethatsuchtaxwascollected. Furthermore,theapplicant cannotin theseproceedingschallengethevalidityoftherespondent'sdecisiontolevythetaxand 15 interest under consideration; such challenge should have been madeatthetimetheassessment wasdetermined,thatis,onthe 19thJune 1985orwithin75daysthereofasprescribedbyArticle 146.3oftheConstitution.Theallegationsastothedateofdisposaloftheimmovablepropertyshouldthereforebeignored. 20 11 Foralltheabovereasonsthepresentrecoursefailsandisherebydismissedbutinthecircumstancestherewillbenoorderasto costs. · Recoursedismissed. " Noorderastocosts. 1161