Non-payment of VAT to department is not misappropriation

Emmanuel Spiteri was accused of misappropriating €38,070.40 between January 1999 and May 2010, when he collected Value Added Tax (VAT) but failed to pay this sum of the VAT Department. 

Magistrate Dr Anthony Vella examined the facts of the case. Spiteri was self-employed and registered with a VAT number. On 10 August 2011, the Commissioner of VAT filed a complaint with the police that Mr Spiteri failed to pay the VAT he owed according to the returns he himself presented. 

According to the complaint, he owed the department €38070.40. On 25 August 2011, Spiteri gave the police a statement and admitted that he owed this to the police and as a result they arraigned him.

The Prosecution produced representatives of the Department, who presented copies of VAT returns of the defendant, which were not accompanied with any payment. The defendant then produced a number of judgments, which showed that he was charged and found guilty of not filing the VAT returns. Spiteri testified but was not clear on how much he owed the VAT Department.

The Court, on delivering its judgement, held that it was clear that the defendant did not pay the tax according to his own returns and that he was in fact already found guilty in the VAT sittings. 

The Court then examined that there existed the elements of the crime of misappropriation as outlined in Article 293 of the Criminal Code. On this, the Maltese Courts follow what Italian jurists have written. 

In a previous judgment on 12 March 2009 in Il-Pulizija –v- Manueli Cantiar, the court quoted from a 1952 judgement, which defined the crime of misappropriation when it takes place when the person takes control of the thing and from the circumstances of the case, the intention was not to use the thing as intended. 

In a 1998 judgment, Il-Pulizija –v- Raymond Falzon, it was held that there are authors who held that if that persons gives back the thing, it neutralised the intention to use the thing for his own gain and profit at the victim’s prejudice

In another judgment, Pulizija –v- George Grech, decided on 22 April 2009, the Court of Appeal held that what Court had to look out for is not only the general criminal intention of the appellant, in that particular case, but if there existed the intent to commit a misappropriated. 

The Court quoted from the Italian jurist Luigi Majno and from this the Court held that the elements of misappropriation included the possession of the object that is not of the defendant, possession of which is also accompanied by the criminal intention to do something with that object which was not intended for. 

The classical example is when a person hands money to someone for a specific task but does something else with that money. There is a difference between the crime of misappropriation and from the civil obligation of fulfilling an obligation. Therefore, the first element is that there must have been an exchange from one person to another of an object be it money or other property. 

In this particular case, the VAT Department did not give the defendant any money to pay his arrears and Spiteri was not entrusted with any money from the Department to do something with it. Article 293 of the Criminal Code is clear that the object, in this case money, is given to the defendant and he is bound to give it back or else does something he is allowed to do. 

In this case, the Department of VAT did not give anything to Spiteri. The Court commented that if it had to extend this prosecution’s argument then anybody owing money, for electricity for example, might be charged with misappropriation. Therefore, the court held that the charge could not be upheld against Spiteri due to the fact that the prosecution failed to prove an essential element of the crime.

Dr Malcolm Mifsud is a partner at Mifsud & Mifsud Advocates