Jan 2015, Issue 1
The IRD lost in the Aviation fuel supply case as a matter of procedural fairness
The Court of Final Appeal (CFA) recently handed down its judgment in the Aviation Fuel Supply case. The substantive issue before the CFA was whether balancing charges should be imposed on the taxpayer upon transfer of certain assets. Such issue was only raised by the Commissioner of Inland Revenue (CIR) when the case proceeded to the Court of Appeal (COA) and after the statutory six-year limitation period for the assessment in dispute had already expired. Although there may be merits in the CIR's argument on the balancing charge issue technically, the CFA dismissed the CIR’s appeal and held that the assessment under appeal cannot be revised at this stage to impose the balancing charges as allowing the CIR to do so would be unfair to the taxpayer.
A key lesson to learn in this case is that it is crucial to include all possible alternative arguments at the early stage of a proceeding such that if one argument fails, the other fallback arguments (if any) can still be relied upon.
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