Supreme Court Judgement: Bunny Holdings (BVI) v MIRA

/in , , /by

 
Summary

An appeal where the Supreme Court considered whether a procedural decision already appealed, can be re-appealed when appealing the decision on substantial issues of the same case.1

 
Factual Background

  1. Bunny Holdings entered into a lease agreement with a non-resident enterprise, Market Overview, for the long term strata lease of a water villa at Soneva Fushi by Six Senses Resort for a period of 35 years. The lease was entered into in accordance with the Grant of Rights Regulation2.
  2. The MIRA made an assessment requiring Bunny Holdings to pay additional tax under the Tourism Goods and Services Tax Act3 (“TGST Act”). The MIRA’s position was that the long term strata lease between Bunny Holdings and Market Overview constitutes a taxable supply under the TGST Act.
  3. Bunny Holdings filed an objection to the MIRA against the tax assessment. However, the MIRA disallowed the objection of Bunny Holdings and on 31 July 2012, the MIRA communicated its decision to Bunny Holdings via an Objection Review Report (“ORR”) of the MIRA. According to Section 44 of the Tax Administration Act4 (“TAA”), had Bunny Holdings wished to appeal the decision of MIRA in the ORR, an appeal had to be submitted to the Tax Appeal Tribunal (“TAT”), within 30 days from that decision. However, Bunny Holdings did not appeal the ORR within the 30 day period.
  4. When Bunny Holdings did not pay the tax it was required to be paid under the assessment, utilising the authority given to MIRA under Section 47 of the TAA that allows MIRA to recover unpaid taxes from a third party, the MIRA froze the bank accounts of Bunny Holdings and directly deducted the unpaid taxes and fines from the accounts.

 
Procedural History

  1. Bunny Holdings appealed at TAT, vide Case Number TAT-CA-G/2013/001, contending that the MIRA acted in contravention of the TGST Act and taxes and fines withdrawn by freezing its bank accounts, were not payable under the TGST Act. The MIRA, however, raised a procedural issue, contending that the TAT did not have jurisdiction to hear the case. MIRA’s contention was that since Bunny Holdings did not appeal the decision within the 30 day period stipulated under Section 44 of the TAA, the decision of MIRA in the ORR was final.
  2. The TAT, in holding against the MIRA, ruled that the TAT has jurisdiction and proceeded with the substantive matters of the case. The MIRA appealed this procedural decision with the High Court vide Case Number 2013/HC-A/185. When MIRA failed to attend the hearing the High Court dismissed the appeal.
  3. Subsequently, the MIRA resubmitted an appeal for a second time contending the same procedural decision of the TAT vide Case Number 2013/HC-A/258. However, before a judgment was reached in the case, the TAT already delivered the decision in first instance on the substantial issues in favour of Bunny Holdings. Four out of the five tribunal members that heard the case were of the opinion that the case was appealed pursuant to Section 47(f) of the TAA that allowed for an appeal to be submitted within thirty days from when the MIRA sends the notice under Section 47(a).
  4. Owing to the decision of TAT, the High Court, in Case Number 2013/HC-A/258 held that as the substantive matter had already been decided upon, the High Court can no longer issue a ruling on the procedural matter of the same case. The MIRA did not appeal this decision to the Supreme Court.
  5. The MIRA, however, appealed the decision of the TAT on the substantial issues in Case Number TAT-CA-G/2013/001, to the High Court, included the same procedural point as one of the seven appeal points – in effect re-appealing the same point for a third time, vide Case Number 2013/HC-A/298.
  6. The High Court ruled only on the procedural issue and held that Bunny Holdings could not appeal the MIRA’s objection decision with the TAT as Bunny Holdings failed to appeal the MIRA’s decision within 30 days from the decision of the MIRA as required under Section 44 of the TAA. As such, the MIRA’s assessment and ORR decision would be considered final and not subject to further dispute.

 
Legal Issue

Whether the doctrine of res-judicata bars re-appealing a procedural decision by including it as one of the appeal points when appealing the substantial decision of the same case.

 
Holding(s)

Unanimously allowing the appeal held:

  1. re-appealing a procedural decision when appealing the substantial decision of the same case, at a court of same level, will be barred under the doctrine of issue estoppel and therefore is res judicata, save for appeal to a higher court.
  2. to remand the case to the High Court directing the Court to make a decision on the substantive matters of the case.

Reasoning(s)

  1. The matter is res judicata because (1) the first point of appeal of the MIRA in Case Number 2013/HC-A/298 – the procedural issue of whether the TAT had jurisdiction in the Case Number TAT-CA-G/2013/001, was previously decided upon in the High Court in Case Number 2013/HC-A/258. (2) as the MIRA did not appeal the decision of the High Court in Case Number 2013/HC-A/258, the decision of the High Court in that case is final (3) the parties to the case; Bunny Holdings and the MIRA, remained the same, and so the claim must be stopped under the doctrine of issue estoppel.
  2. The High Court in Case Number 2013/HC-A/298, ruled only on the first point of appeal submitted by the MIRA, and did not examine other points of appeal submitted by the MIRA, nor the Bunny Holdings’s response to MIRA’s appeal points. As those issues were not ruled on in the High Court case, the Supreme Court cannot make a decision on those issues as it will in effect mean that the Supreme Court will be allowing the parties to skip a step in the appeal process and so will be in violation of Article 56 of the Constitution of the Maldives.
References

1 2016/SC-A/25.
2 Regulation Number 2010/R-14.
3 Law Number 19/2010.
4 Law Number 3/2010.