MIRA v Maldives Quality Seafood Pvt Ltd

/in , , /by

 
Summary

An appeal of the Supreme Court, whereby the Supreme Court affirmed the High Court’s application of the rules on stay of enforcement orders laid down in the stay of enforcement order1 issued by the High Court in Allied Insurance v Yacht Tours2 and overturned the Supreme Court’s Writ of Prohibition Number 2011/SC-SJ/04.3

 
Factual Background

  1. Maldives Quality Seafood (MQS) objected to the tax assessment made by Maldives Inland Revenue Authority (MIRA) via the Notice of Tax Assessment and Goods and Service Tax Audit Report dated 20 October 2016.
  2. Detailing its reasons for the objections, MQS submitted a Notice of Objection to the MIRA. In response to the Notice of Objection of MQS, on 29 December 2016, MIRA issued an Objection Review Report (the “ORR”), whereby MIRA rejected MQS’s objections. The reasoning given by MIRA was that only supplies of fish are zero-rated under Section 22 of the GST Act4.

 
Procedural History

  1. MQS appealed MIRA’s decision to reject MQS’s objection at the Tax Appeal Tribunal, vide case number TAT-CA-G/2017/003. The TAT unanimously deciding in favour of MQS held that the MIRA had erred in their decision in the ORR and ordered the MIRA to refund the taxes paid by MQS in relation to the case.
  2. MIRA appealed TAT’s decision at the High Court, vide the case at the docket number 2020/HC-A/104. MIRA also applied for a stay of enforcement order at the High Court to stay the enforcement of the decision of TAT.
  3. However, the Justices of the High Court, vide its decision number 95-B2/CHT/2020/4009 (the “High Court’s Decision”) unanimously decided against issuing a stay of enforcement order as requested by the MIRA.
  4. MIRA proceeded to appeal at the Supreme Court the decision of the High Court not to issue a stay of enforcement order in the case.

 
Legal Issue(s)

  1. What are the confinements within which the High Court must apply the rules on stay of enforcement orders laid down by the High Court in Allied Insurance v Yacht Tours?
  2. Is the decision of the High Court not to issue a stay of enforcement order in this case in contravention of the Writ of Prohibition of the Supreme Court (Number 2011/SC-SJ/04) and contravene MIRA’s right to appeal?
  3. Did the High Court contravene the principles of natural justice and MIRA’s right to a fair and transparent hearing in deciding not to grant a stay of enforcement order?.

 
Holding(s)

Unanimously dismissing the appeal, the Justices of the Supreme Court held that:

  1. As the MIRA was not able to substantiate how the High Court erred in principle in its application of the rules on stay of enforcement orders laid down in Allied Insurance v Yacht Tours, the Supreme Court cannot decide that the High Court had erred in applying the rules to a decision within the discretionary powers of the High Court.
  2. Even though under the Supreme Court’s Writ of Prohibition (Number 2011/SC-SJ/04), an appeal can amount to automatic stay of enforcement of lower court’s decision, this is not good law.
  3. Even though the MIRA claimed that its appeal right will be lost if a stay of enforcement is not granted in case, the fact that MIRA has already appealed the TAT’s decision at the High Court contradicts MIRA’s such claims. Further, MIRA was unable to substantiate how the appeal rights are limited if a stay of enforcement is ordered.
  4. In deciding not to grant a stay of enforcement order in the case, the High Court has not has contravened the principles of natural justice and right to fair and transparent hearings conferred under Article 42 of the Constitution.

Reasoning(s)

On the application of rules on stay of enforcement orders in Allied Insurance v Yacht Tours

  1. The rules on stay of enforcement orders laid down by the High Court Allied Insurance v Yacht Tours can be regarded as general rules to apply when deciding on stay of enforcement orders
  2. Under the principles of treating like cases alike and juridical precedent, the High Court is only required to apply the rules on stay of enforcement orders it previously laid down in case number Allied Insurance v Yacht Tours, after having considered the surrounding circumstances and facts of a particular case, i.e., precedents set by previous decisions are required to be applied subjectively in each case, taking into account the facts of that case.
  3. The MIRA did not contend the validity of the rules laid down by the High Court in Allied Insurance v Yacht Tours and the discretionary powers of the High Court to issue stay of enforcement orders under Sections 67 and 68 of the High Court’s Regulation. MIRA’s contention was that the High Court had in principle erred in applying the rules in Allied Insurance v Yacht Tours to the appeal of MIRA. However, MIRA did not substantiate any reason as to how the High Court erred in principle.

On writ of prohibition and automatic stay of enforcement

  1. A writ of prohibition is a written order of a higher court prohibiting a lower court from carrying out an action because it is outside the lower court’s jurisdiction. Such writs of prohibitions do not stay the enforcement of a lower court’s decision.
  2. The Writ of Prohibition of the Supreme Court was handed down in relation to an application for leave to appeal and without granting the leave to appeal at the Supreme Court, without the registration of the case, and without a hearing. The Writ of Prohibition of the Supreme Court was therefore handed down without following the proper court procedures.
  3. It is a general principle of law that an appeal of decision does not automatically amount to a stay of enforcement order. The enforcement of a decision can only be stayed when an appellate court issues a stay of enforcement of that decision. Appellate courts must issue such stay orders after taking into consideration the fact of the case and weighing the costs and conveniences of such orders.

On right to appeal and stay of enforcement orders

  1. Appeal means to apply to a higher court requesting for the judgment or decision of a lower court or tribunal to be reviewed.
  2. While MIRA has already appealed the decision of the TAT on the substantive issue in the case, at the High Court, MIRA did not provide an explanation on how MIRA’s right to appeal will be lost if a stay of enforcement is not ordered.
  3. Although the right to appeal is a constitutional right granted under Articles 56 of the Constitution and it cannot be limited unless by an Act of Parliament, stay of enforcement orders are issued by courts under the discretionary powers conferred on courts by an Act of Parliament. Hence, provided that courts such orders within the confinements of the discretionary powers conferred, such orders cannot be regarded as a limitation of a constitutional right.

On Principles of Natural Justice

  1. The right of fair and transparent hearings provided for under Article 42 of the Constitution comprises of various subheads. The express wordings of Article 42 of the Constitution itself includes (1) right to everyone to fair and a public hearing within a reasonable time by an independent court; (2) all judicial proceedings to be conducted with justice, impartiality and transparency; (3) all judicial proceedings to be public except in exceptional circumstances, and (3) all judgments and order to be pronounced publicly and available to the public.
  2. Although the principle of natural justice is closely related to the principle of right of fair and transparent hearings, it is a separate principle. The principle of natural justice also comprises of various subheads including; (1) the right to know the opposing case and to be heard (hearing rule); (2) the right for the decision maker(s) to be free from bias (rule against bias); (3) the right for a decision to be based on evidence (evidence rule); and (the right for a decision to be proportionate to the circumstances of the case (proportionality).
  3. MIRA only stated that the High Court contravened the principles of natural justice and right to fair and transparent hearings and did not go beyond that to substantiate such claims.
References

1 Order Number 95-B2/CHT/2020/2990.
2 Allied Insurance Company of the Maldives v Yacht Tours Maldives Pvt Ltd [2020/HC-A/158].
3 [2021] SC 60.
4 Law Number 10/2011.