MAURITIUS BREWERIES LTD v THE COMMISSIONER OF INCOME TAX

1996 SCJ 402

1997 MR 1

RECORDS NOS. 42563, 48312, 48501, 49233 (Bis), 50727, 53845, 57894

IN THE SUPREME COURT OF MAURITIUS

In the matter of :-

Mauritius Breweries Ltd

Appellant
versus

The Commissioner of Income Tax

Respondent

In the matter of :-

G. Saddul
Appellant
versus

The Commissioner of Income Tax

Respondent

In the matter of :-

Li Miu Fong Company Ltd.

Appellant
versus

The Tax Appeal Tribunal & Anor

Respondent
In the matter of :-

Panorama Ltd. (now Panorama Ltd. in Voluntary Winding-up)

Appellant
versus

The Commissioner of Income Tax

Respondent

In the matter of :-

Lam Yan On Co Ltd.

Appellant
versus

The Commissioner for Sales Tax

Respondent

In the matter of :-
Ww C. Jankee & Ors
Appellant
versus

The Registrar General

Respondent
In the matter of :-

M. Seetaram
Plaintiff
versus

The State of Mauritius

Defendant

In presence of:

MCCB Limited in liquidation

Co-Defendant

INTERLOCUTORY JUDGMENT

A preliminary point has been taken regarding the constitutionality of (a) the Tax Appeal Tribunal
(called "the Tribunal") set up under the Tax 'Appeal Tribunal Act 1984 (referred to as "the Act") in the first
six cases and (b) the MCCB Claims Tribunal (called "the MCCB Tribunal") set up under the MCCB
Limited (Liquidation) Act 1996 (referred to as "the MCCB Act") in the seventh case. All seven cases were
heard together and we are delivering a single judgment, a copy of which is to be filed in each record.

Leading the onslaught against the Tribunal, learned Counsel for the appellant in the first case
contended, in substance, on the authority of Hinds v The Queen (1977) A.C 195, that the legislature
had acted unconstitutionally in transferring to the Tribunal jurisdiction to hear and determine appeals
against decisions of the Commissioner of Income Tax which was vested in the Supreme Court by the
Income Tax Ordinance of 1950 in force at the time of the coming into operation of our Constitution and
later by the Income Tax Act of 1974 and in restricting the right of appeal from a decision of the Tribunal to
the Supreme Court to questions of law only (section 8 of the Act).

Moreoever, whereas Judges of the Supreme Court by their mode of appointment and security of
tenure are independent and impartial and are perceived to be so, the members of the Tribunal, being
appointed by the Minister of Finance who is in charge of the Income Tax Department whose decision is
challenged, are not seen to be independent and impartial, however able, experienced and honest they
are, the more so as they might constitute a majority on the Tribunal, given that the Tribunal is constituted
by either the Chairman or the Vice-Chairman and two members - vide section 6(1)(a) of the Act.

Learned Counsel for the appellants in the sixth case fully agreed with all those submissions. He,
however pointed out that, assuming that jurisdiction had been lawfully transferred from the Supreme
Court to the Tribunal and the Tribunal had the primary responsibility for ascertaining issues of fact, the
Supreme Court must and does retain its full appellate jurisdiction, just as it did in the past in respect of an
assessment of the Commissioner of Income Tax [vide Langlois v The Commissioner of Income Tax.
[1966 MR 215], over any decision of the Tribunal, notwithstanding section 8 of the Act. That is the reason
why his clients had in their appeal made a frontal attack on the findings of fact of the Tribunal as well as
on points of law.

Learned Counsel for the appellant in the fifth case conceded that the jurisdiction of the Tribunal in
sales tax matters was not only novel but one that was conferred by the National Assembly after the
enactment of our Constitution so that Hinds did not apply. However, he made his own the submissions of
his learned colleague relating to the members of the Tribunal who are not perceived to be independent
and impartial. Furthermore, he was of the view that since there is a full right of appeal as of right under
the Constitution over decisions of subordinate courts, the more reason why there must also be implied, if
need be, a full right of appeal to the Supreme Court over decisions of any tribunal. Finally, he made the
important point, with which we agree, that section 5(3) of the Act which provides that the Tribunal shall sit
in camera is in contravention of section 10(9) of the Constitution which states as follows –

"Except with the agreement of all the parties, all proceedings of every court and and proceedings
for the determination of the existence or extent of any civil right or obligation before any other authority,
including the announcement of the decision of the court or other authority, shall be held in public" (the
underlining is ours).

Learned Counsel for the plaintiff in the seventh case again relied on Hinds to submit that the
MCCB Tribunal has unconstitutionally usurped the jurisdiction of the Supreme Court in bankruptcy
matters. Moreover, the composition of the MCCB Tribunal is not perceived to be independent and
impartial, unlike that of the Bankruptcy Court.

Learned Counsel for the appellant in the second, third and fourth cases and for the co-defendant
in the seventh case respectively took a stand which was markedly different from that of his learned
colleagues. He acknowledged that the legislature could lawfully establish administrative tribunals and
endow them with a jurisdiction hitherto enjoyed by the Supreme Court provided that in the process the
latter does not lose its essential qualities as a Court of superior record and retains an unrestricted right of
appeal over the decisions of those tribunals since the Constitution at no time speaks of the exclusive
jurisdiction of the Supreme Court. Consequently, the latter condition relating to an unrestricted right of
appeal to the Supreme Court which was met in the case of the MCCB Tribunal, was singularly missing in
that of the Tribunal.

As far as the composition of the Tribunal is concerned, learned Counsel found, on the authority of
United Engineering Workers Union v Devanayagan (1967) 2 AER 367, nothing wrong in the Chairman
and Vice-Chairman being appointed by the Public Service Commission and in the members being
appointed by the Minister responsible for his particular department just as is the case with so many other
administrative tribunals e.g. the Board of Assessment set up under the Land Acquisition Act. With regard
to the MCCB Tribunal, the mode of appointment of its President i.e. by the President of the Republic of
Mauritius after consultation with the Minister of Finance [section 9(3)(b) of the MCCB Act] satisfies the
requirements of independence and impartiality of the MCCB Tribunal.

Those submissions were shared to a large extent by both learned Counsel for the respondent in
the first six cases and learned Counsel for the defendant in the seventh case respectively.

Counsel appearing for the defendant in the seventh case made, however, two additional important
points. First, he submitted, on the authority of Karamuth v Universal Hotels Ltd and Mauritius
Commercial Bank Ltd [1988 MR 171], that the MCCB Tribunal had taken only part of the jurisdiction of
the Bankruptcy Court i.e. the claims and disputes arising out of the banking business of the bankrupt and
the defunct MCCB Bank. Moreover, the Bankruptcy Court is not headed by a Judge of the Supreme Court
and is inferior to the Supreme Court. The latter exercises over it a supervisory jurisdiction by way of
unrestricted appeal and judicial review, just as it presently does over the MCCB Tribunal. Second, the
MCCB Tribunal was set up in order to deal expeditiously and without too much formality with the claims
and disputes of persons against the bankrupt and defunct MCCB Bank.

The only point of disagreement concerns the restricted right. of appeal to the Supreme Court over
decisions of the Tribunal Counsel for the respondent in the first six cases was of opinion that Parliament
saw it fit to give the Supreme Court an appellate jurisdiction on points of law only over decisions of the
Tribunal as it wanted deliberately to relieve the Court of the burden of sifting, again through the evidence.
Moreover, the supreme Court still retains its powers of review over the decisions of the Tribunal.

It is clear that Counsel on all sides have raised interesting issues which may \ be resolved if we can
provide answers to the following pertinent questions -

(1) Are the Tribunal and the MCCB Tribunal administrative tribunals, or Courts of law?

(2) What is the rationale, behind administrative tribunals and are they compatible with the
framework of our Constitution?

(3) Is Hinds applicable to the Tribunal and the MCCB Tribunal?

(4) Is an appeal on points of law really restrictive in practice and does it, cover much the same
ground as the Supreme Court's powers of review?

(5) Are the Tribunal and the MCCB Tribunal, by reason of their, membership, independent and
impartial?

(6) Is a right of appeal on points of law only from the Tribunal to the Supreme Court repugnant to
our Constitution?,
 With regard to the first question, we have no difficulty in holding that, in the light especially of the
powers, functions and duties entrusted to the Tribunal and the MCCB Tribunal by the Legislator, both
tribunals are essentially administrative tribunals and not Courts of law established "to exercise the .judicial
power of the State ". In relation to the Tribunal, there is the additional argument that it is inconceivable
that the Legislator would entrust judicial power to two members who are laymen without any legal training
who may, contrary to the views of the Chairman, decide the outcome of the Tribunal's decision - vide
Banana and Ramie Products Co. Ltd v. Ministry of Lands and Natural Resource (1991) LRC 728
which makes an exhaustive analysis of the main cases on this issue.

Moreoever, applying the test laid down by Sankey L.C in Shell Company of Australia Ltd v.
Federal Commissioner of Taxation (1931) AC 275 at page 297, we consider that the Tribunal and the
MCCB Tribunal are !!Q! Courts of law although (a) they give final decisions, (b) may hear witness on oath,
(c) two or more contending parties appear before them between whom they have to decide, (d) they give
decisions which affect the rights of parties, ( e) there is an appeal against their decisions to a Court of law
and (t) they are bodies to which a matter is referred. In other words, the Tribunal and the MCCB Tribunal
do not cease to be administrative tribunals in spite of the fact that they act and are bound to act judicially
and follow substantially the procedure of a Court of law.

We turn now to our second question. In Wade on Administrative Law (6th edition), the learned author
at. pages 897 to 900, makes the following points-

(a) the system of tribunals is an essential part of the machinery of government as it offers
speedier, cheaper and more accessible justice in specialised fields while the process of the
Courts of law is elaborate, slow and costly;

(b) there is a close relationship between the supplementary network of adjudicating bodies, like
tribunals and Courts of law, since in the majority of cases Parliament has provided a right of
appeal from the tribunals to the Courts on questions of law; .

(c) the term ‘administrative tribunals' is a misnomer since (i) they are independent and are
insulated from administrative interference in their decision-making, (ii) their power to
determine legal questions is entrusted by statute, (iii) their decisions are, in essence, judicial
rather than administrative in that they ascertain the facts and apply legal rules to them
impartially, without regard to executive policy;

(d) the tribunals are administrative only in so far as they are part of an administrative set-up for
which a Minister is answerable to Parliament and there exist administrative reasons for
preferring them to Courts of law.
 So much for the "raison d'etre”, of administrative tribunals, like the Tribunal and the MCCB
Tribunal. But how do those two tribunals fit in within the framework of our Constitution? The Constitution
does not make specific mention of administrative tribunals but their existence is acknowledged, in our
opinion, in section 10(8) to (10) thereof When our Constitution speaks of "any court or other authority
required or empowered by law to determine the existence or extent of any civil right or obligation shall be
established by law and shall be independent and impartial", (the emphasis is ours), it has in mind
administrative tribunals, like the Tribunal and the MCCB Tribunal and countless others.

We may here usefully refer to Akonaav and Anor v Attorney-General (1994) LRC 399, which was
quoted to us by learned Counsel for the appellants in the sixth case, where at p. 410 Nyalal1 C.] had this
to say –

"We agree that the Constitution allow the establishment of quasi - judicial bodies, such as the
Land Tribunal, What we do not agree is that the Constitution allows the Courts to be ousted of
Jurisdiction by conferring exclusive jurisdiction on such quasi – judicial bodies. It is the basic
structure of a democratic constitution that state power is divided and distributed between, three
state pillars, These are the Executive, vested with executive power; the Legislature vested with
legislative power, and the Judicature vested with judicial powers. This is clearly so stated under
art 4 of the Constitution. This basic structure is essential to any democratic constitution and
cannot be changed or abridged while retaining the democratic nature of the constitution. It follows
therefore that wherever the constitution establishes or permits the establishment of any other
institution or body with executive or legislative or, judicial power, such institution or body is meant
to function not in lieu of or in derogation of these three central pillars' of the state, but only in aid
of, and subordinate to, those pillars" (the underlining is ours)

His Lordship went on to observe that any purported ouster of the jurisdiction of the ordinary Courts
over a justiciable dispute would therefore have been unconstitutional but adjudicative powers could
properly be conferred on bodies other than Courts provided that final adjudication by way of review or
appeal was reserved for the High Court of Appeal.

We pause here to note that in respect of the Tribunal and the MCCB Tribunal there has been no
ouster of the jurisdiction of the Supreme Court over those two bodies There is a right of appeal (a) on any
question of law from the Tribunal to the Supreme Court, (b) on questions of law and fact from the MCCB
Tribunal to the Supreme Court and the Supreme Court retains its supervisory jurisdiction by review
proceedings over both Tribunals.

In tackling the third question, we must first realise that the jurisdiction of the Supreme Court,
before the establishment of the Tribunal in 1984, was limited to a full right of appeal only against an
assessment of income tax made by the Commissioner of Income Tax. With the advent of the Tribunal,
however, the tax payer has not only such a full right of appeal before the Tribunal against an
assessment [section 91(2) of the Income Tax Act 1974] but also against-

(a) a decision of the Commissioner to make an assessment in respect of a time-barred year

[section 75(3)(c)];

(b) a decision of the Commissioner considering an objection to have lapsed for failure by the tax
payer to furnish the required information [section 92(3)];

(c) a decision of the Commissioner considering an amount to be emoluments on which P.A.YE.

should apply [section 104 (21)];

(d) a decision of the Commissioner requiring information relating to amounts paid as interest
and relating to any account or deposit of any person [section 128(5)];

(e) a request of the Commissioner for information relating to a time- barred period for the
purpose of making an assessment or collecting tax or for any purpose relating to the
administration or enforcement of the Income Tax Act [section l29A(3)].

It is clear therefore that not only the tax payer's full right of appeal has been enlarged before the
Tribunal but his right of appeal admittedly on points of law before the Supreme Court covers many
more issues than a mere assessment of a tax payer. In other words, the final adjudication by the
Supreme Court by way of appeal on points of law has now been enlarged, the more so as even the
Income Tax Department is now given such a right of appeal.

It is equally clear that Hinds would not apply to issues listed at (a) to (e), above but only to the
supervisory jurisdiction of the Supreme Court by way of a full right of appeal over an assessment made
by the Commissioner of Income Tax. Since this jurisdiction which has been transferred to the Tribunal
is, in any event, only a minute portion of the unlimited jurisdiction of the Supreme Court in civil matters
and does not in any way impair the essential characteristics of the Supreme Court, the principles in
Hinds cannot be held to apply to the Tribunal, the more so as the Supreme Court still retains its
supervisory jurisdiction on the Tribunal by way of appeal on points of law and by review. As aptly stated
by Lord Diplock himself at page 222 –

"As with so many questions arising under constitutions on the Westminister model, the
question whether the.jurisdiction vested in the new court it is wide enough to constitute
so significant a part of the jurisdiction that is characteristic of a Supreme Court as to fall
within the constitutional prohibition is one of degree ".
 The instant cases concerning the Tribunal are a far cry from the facts of Hinds where the
Jamaican Parliament purported to set up a new court composed of members of the lower judiciary with
a iurisdiction characteristic of the Supreme Court extending to the trial not only of firearms but also of
all criminal offences, however serious, with the exception of capital offences.

It is also significant that Hinds cannot apply to the fourth and fifth cases which deal with sales
tax matters for the succinct reasons given by learned Counsel appearing in the fifth case. Nor can it
apply to the sixth case which questions the open. market value of land determined by the Registrar-
General since there has been no transfer of jurisdiction from the Supreme Court to the Tribunal but a
transfer of jurisdiction from the defunct Value Assessment Tribunal to the Tribunal - vide The Land
(Duties and Taxes) (Amendment) Act No. 23 of 1993. Just as the Supreme Court had a right of
appeal on points of law over the defunct Value Assessment Tribunal, the Court has retained such a
right of appeal over the Tribunal under the Act.

As for the MCCB Tribunal, as rightly observed by learned Counsel appearing for the defendant
and by Counsel for the co-defendant in the seventh case, Hinds does not apply for the simple reason
that the Supreme Court, as in the past with the Bankruptcy Court which, on the authority of Karamuth
already cited above, is an inferior Court, retains its supervisory jurisdiction over the MCCB tribunal by
way of full right of appeal and of review.

As regards the fourth question, we can do no better than quote again from Wade cited above at
pages 938, 943 and 944 respectively-

"Since appellate courts are concerned almost exclusively with questions of law,
there should be little difference in practice between an unrestricted right of appeal
and a right of appeal on a point of law only … which is clearly intended to be a wide
and beneficial remedy”..

"It is where the right of appeal is unrestricted, paradoxically, that ,judges are
inclined to restrict it ".

The learned author goes on to give various instances of questions of law and errors of law at
pages 936 to 944.

(1) Failure of a tribunal to give reasons for its decision deprives a litigant of his
right of appeal on points of law.
 (2) A tribunal's findings of fact can be challenged on a point of law if they are
based on no evidence.

(3) If a tribunal is primarily a fact-finding body which ascertains the facts, the
question whether those facts satisfy a legal definition or principle is a question
of law.

(4) The application of a legal definition or principle to ascertained.facts is an error

of law if "the case contains anything ex facie which is bad law and which
bears on the determination" or the tribunal's determination is unreasonable
i.e. "one in which there is no evidence to support the determination, or as one
in which the evidence is inconsistent with, and contradictory of, the
determination, or as one in which the true and only reasonable conclusion
contradicts the determination ", per Lord Radcliffe in Edwards v Bairstow
(1956) A.C 14.

(5) An erroneous exercise of discretion by a tribunal which has acted in disregard

of some legal definition or principle eg through self- misdirection or taking into
account irrelevant factors, is an error in Iaw.

(6) Questions relating to the jurisdiction of a tribunal e.g. whether there has been
a breach of the rules of natural Justice or whether the tribunal has acted
within its powers or not, can be raised on appeal as they are points of law.

It is obvious from what precedes that, although appeal and review are distinct procedures,
appeal dealing with merits and review with legality, an appeal on points of law covers much the same
ground as review proceedings as we encounter on appeal the same familiar doctrines of (a) error of
law on the face of the record, (b) reasoned decisions, (c) reasonableness, (d) review for no evidence
and (e) abuse of discretion.

The fifth question can be easily resolved by reference to the case of Bryan v United Kingdom,
a judgment of the European Court of Human Rights of November 22, 1995, which was again cited to
us by learned Counsel for the appellants in the sixth case to whom we are grateful. Bryan lays down
the following propositions:

(a) in order to ascertain whether a body which makes decisions in relation to an applicant's
civil rights and obligations could be considered to be independent and impartial for the
purposes of Article 6(1) of the European Convention of Human Rights, regard must be
 had, inter alia, to the matter of appointment of its members and to their term of office, to
the existence of guarantees against outside pressures and to the question whether the
body presented an appearance of independence;
,
(b) even if the body referred to in subparagraph (a) does not meet the "Article 6(1) standards,
the Convention will not be breached if that body is subject to the control of a judicial
institution which does comply with Article 6( 1);

(c) the scope of the review of the High Court of England which had a right of appeal on points
of law over the determination of the Inspector appointed to conduct the inquiry was
sufficient to comply with Article 6(1), although the Inspector, himself, being amenable to
be revoked at any time by the Secretary of State was not perceived to be independent.

The Court made these interesting observations:

"It was noted that the appeal to the High Court, being on ‘points qf law', was not capable
of embracing all aspects of the Inspector’s decision. In particular, as was not
infrequently the case in relation to administrative law appeals in the Council of Europe
Member States, there was no rehearing as such of the original complaints ,submitted to
the Inspector, the High Court could not substitute its own decision on the merits for that
of the Inspector, and its jurisdiction over the facts was limited. However, apart from the
classic grounds of unlawfulness under English law, the decision could have been
quashed by the High Court if it had been made by reference to irrelevant factors or
without regard to relevant factors, or if the evidence relied on by the Inspector was not
capable of supporting a finding of fact, or if the decision was based on an inference from
facts which was perverse or irrational in the sense that no Inspector properly directing
himself would have drawn such an inference.
.
It was also necessary to have regard to matters such as the subject matter of the
decision appealed against, the manner in which that decision was arrived at, and the
content of the dispute, including the desired and actual grounds of appeal. In that
connection the Court referred to the uncontested safeguards attending the procedure
before the Inspector: the quasi-judicial character of the decision-making process; the
duty incumbent on each Inspector to exercise independent judgment; the requirement
that Inspectors must not be subject to any improper influence; the stated mission of the
Inspectorate to uphold the principles of openness, fairness and impartiality. Further, any
alleged shortcoming in relation to those safeguards could have been subiect to review by
the High Court.
 Since section 10 (8) of our Constitution is derived from Article 6(1), we may apply the principles
of Byan to the composition of the Tribunal. We hold that since the Chairman and the Vice-Chairman
are appointed by an independent Commission i.e. the Public Service Commission, they are not only
independent and impartial but also perceived to be so. As far as the members of the Tribunal are
concerned, they do not in principle satisfy the section 10(8) standards of our Constitution for the
reasons advanced by the three learned Counsel for the appellants in the first, fifth and sixth cases
respectively, although there are many undoubted safeguards attending the procedure before the
tribunal. However, given the fact that the Tribunal is subject to the supervisory control of the Supreme
Court, the latter's scope of review which is the same as that of the High Court of England, is sufficient
to comply with section 10(8) of our Constitution.

As for the President of the MCCB Tribunal, his appointment by the President of the Republic of
the Republic of Mauritius who consults the Minister of Finance but is not obliged to act in accordance
with his advice [section 8(3)(b) of the MCCB Act and section 64 (4) of the Constitution. In any event,
even the appointment does, in our view, satisfy the section 10(8) standards of our Constitution. In any
event, even if the appointment does not, the full right of appeal over the MCCB Tribunal by the
Supreme Court is sufficient to comply with section 10(8) of our Constitution.

We are left with the final question. It is to be noted that, although our Constitution does
contemplate the existence of so-called administrative tribunals, as explained already, it does not confer
on the Supreme Court any supervisory jurisdiction by way of a full right of appeal, as it does in relation
to subordinate courts, ie. courts of law subordinate to the Supreme Court (sections 82 and 111). It is
the Legislator that has deemed it fit to give, as he is entitled, a right of appeal from the Tribunal to the
Supreme Court on points of law only. This is what was intended by the Legislator and effect must be
given to such an intention. Consequently, we cannot say that such a right of appeal is incompatible
with the provisions of our Constitution, the more so when we bear in mind Akonaay and the fact that,
as stated already, there is not much difference in practice between an unrestricted right of appeal and
a right of appeal on points of law.

It is significant in this connection that on the particular facts of Langlois, mentioned already, the
Supreme Court will still be able to exercise its supervisory jurisdiction by way of appeal over the
Tribunal since the question whether payment of a lump sum in lieu of a pension is a capital payment or
taxable income is essentially a question of law.
!
 For all the reasons given, we hold that the Tribunal and the MCCB Tribunal are constitutionally
constituted and that section 5(3) of the Act contravenes section 10(9) of the Constitution. The
preliminary objections are accordingly overruled.

A.G. PILLA Y
CHIEF JUSTICE.

K.P. MATADEEN
JUDGE

P. LAM SHANG LEEN JUDGE

JUDGE

20 December, 1996

Judgment delivered by Hon. A.G. Pillay, Chief Justice.

Counsel for the appellant in the first case :Sir Marc David Q. C. & r.
:Mr L.E.Venchard Q.C.
Attorney for the appellant in the first case : Mr. C.H. de Froberville

Counsel for the appellants in the second,): Sir Hamid Moollan Q.C.
third and fourth cases and for the ) :
co-defendant in the seventh case ) :

Attorney for the appellants in the second): Mr A. Rajah, SA.

third and fourth cases )
Counsel for the appellant in the fifth case): Mr D. Basset, Senior Counsel and ) Mr D. Benoit Attorney
for the appellant in the fifth case Mr. J.J. Robert
Counsel for the appellant in the sixth case' Mr. G. Ollivry, Q.C Attorney for the appellant in the sixth
case Mr N. Appa Jala
Counsel for the plaintiff in the seventh case Mr. Y. Mohamed, S.C. c Attorney for the plaintiff in the
seventh case Mrs. S. Ramano
Attorney for the Co-defendant in the seventh: Mr. A.Robert I
I
case i
Counsel for the respondents in the first, ): Mr N. Beekarry, Principal State second, third, fourth, fifth and
sixth cases ): Counsel and Mr. R. Pursem,
and for the defendant in the seventh case ): Principal State Counsel 1
Attorney for the respondents in the first, ): State Attorney second, third, fouth, fifth and sixth cases and)
: : for the defendant in the seventh case ) I
,