No jurisdiction where the disputes process has not been completed
2015 case note – TRA found no jurisdiction where the disputes process has not been completed - statement of position, interlocutory, District Court Rules.
The disputant sought an ordering requiring the Commissioner of Inland Revenue ("the Commissioner") to issue a disclosure notice and statement of position with respect to its Notices of Proposed Adjustment ("NOPAs") that were part of a dispute progressing through the disputes process. The Taxation Review Authority ("the Authority") held it is necessary for the disputes process to be completed before challenge proceedings can be filed and so it did not have jurisdiction to hear the application. Further, the jurisdiction of the Authority is found in the Taxation Review Authorities Act 1994, not the District Court Rules 2014. The Authority also found it did not have the power to direct the Commissioner to issue a disclosure notice and she cannot be compelled to do so. While the Standard Practice Statement may set out what is done “generally” or “usually”, it is only a guideline and there is no obligation on the Commissioner to follow this course.
Where there is no assessment or any disputable decision, the disputes process must be completed before a challenge proceeding can be filed.
The Commissioner cannot be compelled to issue a disclosure notice and there is no timeframe in which she must do so.
V Limited (“the disputant”) filed an interlocutory application for an order requiring the Commissioner to file a disclosure notice and a statement of position in response to the disputant’s NOPAs dated 22 and 24 July 2015 (“the July NOPAs”). The Commissioner opposed the making of the orders sought.
The Commissioner submitted that the dispute commenced by the July NOPAs was still in the conference stage of the disputes process and therefore the Authority had no jurisdiction to hear and determine the application. She further submitted that the Commissioner could not be compelled to issue a disclosure notice.
The interlocutory application was filed in the context of a challenge proceeding relating to earlier NOPAs issued by the disputant of 1 June 2015 (“the first NOPAs”). The first NOPAs proposed adjustments totalling $138.73 to various GST returns of the disputant. On 3 July 2015, the Commissioner accepted the proposed adjustments and advised the disputant that she was still reviewing the original returns. The Commissioner stated that the accepted adjustments would be reflected in any adjustments made when her review was completed.
On 10 July 2015, the disputant informed the Commissioner that it was disputing the full amount of the original returns and that the Commissioner was required to issue a Notice of Response (“NOR”).
On 22 July 2015, the Commissioner replied stating that the dispute commenced by the first NOPAs was at an end because she had accepted the proposed adjustments and consequently it was not necessary to issue a NOR.
The disputant issued the July NOPAs. The NOPAs issued on 22 July 2015 proposed to amend the refunds claimed to only the amounts accepted by the Commissioner in the first NOPAs. The NOPAs issued on 24 July 2015 stated that these NOPAs were issued in substitution for the NOPAs issued on 22 July 2015 which the disputant purported to withdraw. The 24 July 2015 NOPAs proposed to adjust the original returns to include both the refunds originally claimed and the purported adjustments accepted by the Commissioner.
The Commissioner issued a NOR to the 24 July 2015 NOPAs on 18 September 2015. This was rejected by the disputant on 21 September 2015. By Notice of Claim dated 25 September 2015, the disputant commenced proceedings in the Authority.
The first issue was what was the jurisdiction of the Authority to hear the application.
Under Part 8A of the Tax Administration Act 1994 (“TAA”) a disputant is able to challenge assessments and disputable decisions.
The tax positions advanced in the July NOPAs are part of a dispute which is still progressing through the disputes process under Part 4A of the TAA. Presently there is no assessment and nor is there any disputable decision. It is necessary for the disputes process to be completed before a challenge proceeding can be filed. The interlocutory application relates to the July NOPAs which are still subject to the disputes process, and the Authority held it does not have jurisdiction to hear the application.
The second issue was whether the Authority could direct the Commissioner to issue a disclosure notice.
The disputant relied upon the District Court Rules 2014 relating to the hearing of interlocutory applications and in particular upon Rule 7.37, which provides that a Judge may make any interlocutory order or grant any interlocutory relief that the Judge thinks just. The disputant submitted that in the circumstances of this case it was just for the Authority to make an order compelling the Commissioner to issue a disclosure notice so that the dispute could be advanced.
Judge Sinclair found that the District Court Rules set out procedures to enable the effective administration of proceedings but did not confer any jurisdiction.
The disputant also referred to the Commissioner’s standard practice statement 11/06 Dispute Resolution Process commenced by a taxpayer (“SPS 11/06”) in support of its application, particularly noting paragraphs 248 and 250.
Judge Sinclair found that SPS 11/06 sets out what is done “generally” and “usually”. It was clear that there is no obligation on the Commissioner to follow this course and that there will be cases where the timeframe in SPS 11/06 was not followed. Importantly this statement was a guideline only.
No timeframe is specified in s 89M(1) of the TAA within which the disclosure notice has to be issued and the TRA did not have the power to direct that the Commissioner must issue one.
The Authority dismissed the disputant’s interlocutory application.
Goods and Services Tax Act 1985, Tax Administration Act 1994