Court of Appeal
Civil Appeals Nos. 5 and 6 of 1987
14th December, 1988
KENNETH ST. L. HENRY J.A.

Mr. Musa for Appellants
Mr. Gandhi Solicitor General and Mr. Hesse for Respondents

Civil Appeals - Assessment of Income Tax - Income Tax Act - Appeals against decision of the judge of the Supreme Court - Essential ground of Appeal was that the learned judge of the Supreme Court erred in affirming the order of the Magistrate because the order ought not to have been made without proper evidence that Appellant was served with notice of assessment of tax claimed and had failed to pay - Act puts no burden on Chief Collector to prove anything - Defaulter must show cause why he should not be ordered to pay amount claimed - Decision of Supreme Court affirmed - Appeal dismissed.

J U D G M E N T

These two appeals were heard together by consent as they involve identical points of law arising from similar facts in relation to the assessment of income tax for the years of assessment 1981, 1982 and 1983. In each case a summons was issued to the Appellant under section 71 of the Income Tax Act ("the Act") to appear before a Magistrate to show cause why he should not be ordered to pay the sum specified in the summons and detailed on the back thereof as due and owing, for tax, interest and charges for the years of assessment 1981, 1982 and 1983. The summons was dated January 15, 1986 and was issued for January 23, 1986. The Appellant communicated with the Magistrate seeking an adjournment to February 6,1986. This was granted. When a further adjournment was sought however it was refused and the Magistrate proceeded to hear the summons ex parte and to make an order for payment of the sum claimed "by 31.3.86 c.d, distress. Payment to be made to the Income Tax Department." The Appellant appealed to a judge of the Supreme Court who modified the Magistrate's order by deleting the provision for recovery of the amount claimed by distress and allowing the Appellant "to make representation as to payments of the taxes, fines and costs owing by instalments or otherwise as provided by section 72." In all other respects he affirmed the order. The Appellant in each case appeals against the decision of the judge of the Supreme Court.

The essential ground of appeal argued is that the learned judge of the Supreme Court erred in affirming the Magistrate's order because that order ought not to have been made without proper evidence that the Appellant had been served with a notice of assessment of the tax claimed and had failed to pay. Section 71 of the Act is as follows:

"71. (1) Notwithstanding that the name of the person who has made default in the payment of the tax is included in a list to any warrant authorising a levy as provided in section 70, the Chief Collector may at any, time that such a tax remains unpaid cause the operation of the said warrant to be suspended as against such defaulter and in lieu thereof to apply to the magistrate of the district in which the person in default is for the time being staying or residing, for a summons directing the defaulter to attend before such magistrate, at a time to be named in the summons, to show cause why he should not be ordered to pay the amount aforesaid, as a judgment debt, and the magistrate may issue such summons and cause it to be served and deal with the defaulter in such manner as is provided in section 72.

(2) Notice of any applications intended to be made under this section shall be given by the Chief Collector to the Minister."

Counsel for the Appellant argues that the object of the section is to recognize the amount claimed by the Chief Collector of Income Tax as a judgment and that therefore evidence must be led at the hearing of the summons in support of the claim to justify an "entry of judgment" by the Magistrate. The Solicitor General on the other hand argues that the section puts no burden on the Chief Collector to prove anything; it is the defaulter who, must show cause why he should not be ordered to pay the amount claimed.The section, he submits, is in two parts. The first part empowers the Chief Collector to suspend execution of the warrant to levy issued under section 70 and in lieu thereof to apply to the Magistrate for a summons. If there is any duty on the Collector to prove the default it is at this stage. The second part deals with the power of the Magistrate on the hearing of the summons. At that stage the Magistrate (who has earlier issued the summons and then been satisfied that the person to be served was a defaulter) is concerned only with whether an order for payment ought to be made. The procedure is similar to the United Kingdom judgment summons procedure. In the present case all that was required to be proved was the summons had been served on the Appellant.

I agree with the submissions of the Solicitor General. Sections 72 and 73 read in conjunction with section 71, in my view, make it clear that those submissions are correct. Sections 72 and 73 provide as follows:

"72. If a summons for enabling the defaulter to show cause as mentioned in section 71 is issued, the magistrate may on the date named in the summons or at any other date to which the hearing may be adjourned, order the defaulter to pay into court the amount of the unpaid tax and fines, and such costs and expenses as are for this purpose from time to time fixed by the Minister, or order him to pay into court any part of such amount which the magistrate may think the defaulter able to pay or arrange for paying, within seven days of the order or within such extended time as may be determined by the magistrate, and either in a lump sum or by instalments.

"73. (1) If the person summoned as provided in section 71 fails to comply with the summons without lawful excuse or if he makes default in payments into court in the manner aforesaid, the magistrate may commit such person to prison for a term not exceeding six weeks or until payment of the sum ordered to be paid (if paid before the expiration of such term).

(2) No committal under subsection (1) shall be ordered for default in payment unless it be proved to the satisfaction of the magistrate that the person making default either has or has had, since the date of the order, the means to pay the sum in respect of which he has made default, and has refused or neglected, or refuses or neglects to pay it.

(3) Proof of the means of the person making default may be given in such manner as the magistrate thinks just, and, for the purposes of such proof, the debtor and any witness may be summoned and their attendance enforced by the same processes as in cases, in which the magistrate has summary jurisdiction in criminal matters, and such debtor and witnesses may be examined on oath.

(4) Every order of committal under this section shall be issued, obeyed and executed in manner similar to commitments by magistrate in the exercise of their summary jurisdiction in criminal cases.

(5) Imprisonment under this section shall not operate as a satisfaction or extinguishment of the judgment debt."

It is clear that the order for committal of the defaulter under section 73 may be made either if the defaulter fails to appear in answer to the summons or if he disobeys a payment order made at the conclusion of the hearing of the summons which has been issued under section 71. That summons, therefore, must clearly be a summons in the nature of a judgment summons and not merely one whose objective is to have the amounts claimed formalised or declared to be a judgment.
In my opinion the decision of the learned judge of the Supreme Court was correct. I would dismiss the appeals and affirm that decision.

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