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Constitutional Court upholds landmark tax decision

The Constitutional Court has upheld a judgment that the failure of the Inland Revenue Department to process an ex officio tax assessment for twenty-seven years was in violation of a company's fundamental human right to a fair hearing within a reasonable time. The court however reversed the award of €30,000 which the first court had given to John Geranzi Ltd.

The court heard that in 1977 the Inland Revenue Department had issued an ex officio tax assessment and had claimed additional tax of Lm7,912 from the company. John Geranzi Ltd had appealed from this assessment but the Commissioner of Inland Revenue had only dismissed this objection after more than 27 years had elapsed. It was only when the refusal was issued that the company was entitled to have recourse to the courts.

The First Hall of the Civil Court had upheld the company's claim and had awarded it €30,000 in compensation for the delay.

But the Commissioner appealed to the Constitutional Court composed of Chief Justice Silvio Camilleri, Mr Justice Giannino Caruana Demajo and Mr Justice Noel Cuschieri.

On appeal the Commissioner submitted that the delay in the processing of the company's objection to the ex officio tax assessment was due to the failure on the part of the company to submit the necessary documentation at the opportune stage. The Commissioner added that the law did not impose a time limit within whcih an objection had to be processed.

The Constitutional Court disagreed with these submissions. It was true that the company might have contributed to the delay but this did not exonerate a government department from the obligation of decising a case with speed and efficiency.

A delay of 27 years could not ever be considered to be reasonable said the court. If the Commissioner was of the opinion that the company was not co-operating, then the Commissioner ought to have issued a refusal of the objection so that the company could have recourse to the courts.

The court added that the company's right of recourse to the courts only came into being when the refusal was issued. This was tantamount to preventing the company from access to the courts.

When referring to the award of €30,000 by the first court, the Constitutional Court pointed out that the Commissioner was requesting payment of the sum of Lm7912 together with additional tax which was described as an administrative fine. It was not the opinion of the Constitutional Court that financial compensation was due to the company.

A more opportune remedy would be that of annulling the award of EUR30,000 and annulling the Commissioner's ex officio assessment. No interest was to run on any tax which might be deemed to be due by the company.

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