1969 (7) TMI 120 - Other - Income Tax

Summary

Issues Involved:
1. Whether the tribunal's procedure under section 28(5) of the Finance Act, 1960, was unfair.
2. Whether the principles of natural justice apply to the tribunal's determination of a prima facie case.
3. Whether the taxpayer is entitled to see and respond to the commissioners' counter-statement before the tribunal's decision.

Issue-Wise Detailed Analysis:

1. Whether the tribunal's procedure under section 28(5) of the Finance Act, 1960, was unfair:

LORD REID emphasized that natural justice requires fairness in all circumstances, and the tribunal's procedure must balance the need for expedition with the defendant's opportunity to see the material against him. He concluded that the statutory procedure was sufficient and not inherently unjust, but the tribunal could seek further comments from the taxpayer in unusual cases.

LORD MORRIS OF BORTH-Y-GEST highlighted that natural justice is about "fair play in action" and must be flexible. He expressed a dislike for situations where the tribunal has unseen documents influencing its decision but concluded that if the tribunal follows statutory directions, it should not be deemed unfair.

LORD GUEST agreed with the judgment of LORD DONOVAN and added that the principles of natural justice must be clear and definite. He found the statutory procedure sufficient for the taxpayer to state his case and not manifestly unfair.

LORD DONOVAN explained the statutory procedure under section 28 and concluded that the taxpayer's inability to see the counter-statement before the tribunal's decision was more apparent than real unfairness. He emphasized that the statutory declaration allows the taxpayer to present all relevant facts and arguments.

LORD WILBERFORCE, while agreeing with the dismissal, emphasized the need to look at the procedure's fairness in its setting. He concluded that the tribunal's procedure, though not perfect, did not reach a level of unfairness requiring court intervention. He suggested that the tribunal should ensure fairness in exceptional cases.

2. Whether the principles of natural justice apply to the tribunal's determination of a prima facie case:

LORD REID and LORD MORRIS OF BORTH-Y-GEST both acknowledged the importance of natural justice but emphasized flexibility and context-specific application. They concluded that the statutory procedure did not inherently violate natural justice.

LORD GUEST emphasized the need for clear principles and found that the statutory procedure provided sufficient opportunity for the taxpayer to present his case, thus aligning with natural justice.

LORD DONOVAN argued that the taxpayer's right to stop proceedings at the outset by satisfying the tribunal that there is no prima facie case was an additional safeguard. He concluded that the statutory procedure did not violate natural justice.

LORD WILBERFORCE rejected the idea of a difference in principle between final and preliminary decisions regarding natural justice. He concluded that the statutory procedure, though not perfect, did not warrant court intervention to extend natural justice principles.

3. Whether the taxpayer is entitled to see and respond to the commissioners' counter-statement before the tribunal's decision:

LORD REID and LORD MORRIS OF BORTH-Y-GEST both concluded that the taxpayer was not entitled to see the counter-statement before the tribunal's decision but acknowledged that the tribunal could seek further comments in unusual cases.

LORD GUEST found the statutory procedure sufficient and not manifestly unfair, thus not requiring the taxpayer to see the counter-statement.

LORD DONOVAN argued that allowing the taxpayer to see and respond to the counter-statement would complicate the procedure and was not intended by Parliament. He concluded that the statutory procedure was fair.

LORD WILBERFORCE acknowledged the potential unfairness but concluded that the statutory procedure did not reach a level requiring court intervention. He suggested that the tribunal should ensure fairness in exceptional cases.

Conclusion:
The appeal was dismissed, with all Lords agreeing that the statutory procedure under section 28(5) of the Finance Act, 1960, was sufficient and did not inherently violate the principles of natural justice. The taxpayer was not entitled to see and respond to the commissioners' counter-statement before the tribunal's decision, but the tribunal could seek further comments in unusual cases to ensure fairness.