Appeals Court rakes in favour of the Commissioner of Revenues

The Court of Appeal held that the Court does not have the competence to determine whether the Revenues Commissioner had a title or not over the amount based on the evidence presented.

This was held in Francis Grima in his own name and in his capacity as director and representing the company Outwest Limited vs Commission of Revenues.

Francis Grima instituted proceedings against the Commissioner of Revenues because he was presented with an official letter to pay the sum of €188,643.74 as a representative of Outwest Ltd, a company which he is a director of.  Furthermore, the Commissioner informed the representative that, if he fails to pay the overdue amount in the time given to him, he would proceed to execute the said executive title through the appropriate mandates.

Grima argued that the Commissioner failed to follow the provisions of the Value Added Tax Act, thus disabling them from acquiring an executive title against Grima. The procedure aforementioned that must be adhered to was quoted from the judgment of Aluminium Extrusions Limited u Raymond Borg vs Director General (VAT) given by the Court of Appeal on 27 April 2016. The plaintiff went on to state that the defendant’s official letter was untimely as Grima was still waiting for a reply from the Commissioner on the application submitted by the Company involved which was done in accordance to the provisions set out in the Value Added Tax Regulations (Cancellation of Interest and Administrative Penalties) entered under the Value Added Tax Act of 1998, the Customs and Excise Tax Act and the Value Added Tax Acts of 1994), i.e. an application under Legal Notice 456 of 2011 as amended. Thus, according to the plaintiff, there is no sense accompanying the Commissioner’s decision to impose an executive title over the entire amount that Grima was ordered to pay, which is €188,643.74.

Grima also argued that once again the Commissioner had no right to impose an executive title over the amount owed if any amount in the total amount owed came from any administrative fines. Another plea the plaintiff forwarded was that Grima, as a director had never during his management of the company had any monies or property that were of the company or owed to the company, therefore rendering him an unqualified to be a representative of the company, Outwest Ltd. He should not be held responsible for any amounts that may be owed by the Company he managed. Finally, the last plea presented to the court by the plaintiff is that, the request for the payment of the sum of €188,643.74, as deduced by the Commissioner in his official letter of 15 December 2015, is totally unfounded in fact and in law.

The First Hall of Civil Court rejected the first two pleas presented by the defendant and therefore the judgment was to be decided on the 3rd and 4th plea. This decision was taken on 5 February 2021 after postponed sittings due to the COVID-19 pandemic whereby, the Court favoured the defendant, but the decision was appealed by the plaintiffs and requested the Court to annul the judgment that was appealed due to reasons provided for in Article 790 of the Code of Organisation and Civil Procedure, and also because it is extra petita and/or contains defects that prejudice the right to be heard appropriate to all parties. The Commissioner argued that during the hearing regarding the 3rd and 4th plea, there was no request for continuation and that Court was satisfied and was ready to decide on the matter at hand as it examined those two pleas only and nothing more. As a result, the defendant was left confused as to why the plaintiff/appellant would consider the judgment extra petita. The Court of Appeal found the first ground of appeal not meritorious and was dismissed.

The Plaintiff/Appellant also requested the court to remand the acts back to the First Court for a continuation of the proceedings and if both requests were to be dismissed, it requested the court to authorise that, after thoroughly presenting all remaining evidence regarding the merits of the current case, the court proceeds to dismiss the third and fourth preliminary objections raised by the Commissioner along with any other objections not yet addressed. Additionally, the court grants the petitioner's request as outlined. The Court of Appeal in this case, agreed with the First Court that it did not have the competence to decide whether the Commissioner had a title or not over the amount based on the evidence presented. The evidence substantiated the claims made by the plaintiff and that the official letter of the Commissioner was quoted to be “unfounded in fact and in law” and once again declared the second ground of appeal brought by the plaintiff-appellant to be unfounded and was subsequently rejected.

In its final verdict, the Appeals Court rejected the appeal lodged by Grima and confirmed the judgment made by the First Court. In addition to this, the Court ruled that the costs of both cases were to be incurred by the zappellants.