Court of Appeal confirms who can file a GST return
2017 case note - Court of Appeal confirms who can file a GST return - standing, strike-out, liquidation, incorporated society.
Mr Cullen filed GST returns in the name of Tamaki Rugby League Incorporated (“the Society”). However, the Society did not exist during the periods of the GST return. Later the Society was eventually restored to the register, but as it was in liquidation, the Official Assignee was liquidator. Therefore, Mr Cullen did not have the standing to act for the Society and file proceedings. In the High Court, Fitzgerald J found in favour of Mr Cullen. The Commissioner of Inland Revenue (“the Commissioner”) therefore appealed to the Court of Appeal and was successful in striking out the High Court proceedings.
The impact of the decision:
- Only the taxpayer, not another party, can use the taxpayer’s registered details to file returns and claim refunds.
- The Commissioner cannot be estopped by her previous errors (of law) from performing her statutory obligations to apply the revenue statutes correctly.
- Only the liquidator of an incorporated society in liquidation, or somebody acting with the liquidator’s consent, has standing or authority to issue proceedings on behalf of the society.
On 10 June 2016, Mr Rhys Cullen filed a goods and services tax (“GST”) return with Inland Revenue in the name of the Society. The return claimed a GST refund of $14,951.24 for taxable activities carried out during the period from 1 April 2016 to May 2016. However, the Society did not exist either on the date the return was completed or, more particularly, during the preceding two-month period.
The Society was struck off the register in November 2012 and remained off the register until 17 June 2016, when Associate Judge Bell made an order for its restoration to the register. As a result, given that the Society was now back in existence, the Official Assignee resumed office as liquidator.
In August 2016 the Commissioner issued a notice of assessment to the Society reducing the GST refund due from $14,951.24 to $101.24. Mr Cullen responded by issuing a notice of proposed adjustment in the Society’s name. The Commissioner did not issue a notice of response.
Mr Cullen filed proceedings with the High Court in September 2016. He acted for the Society and sought declarations that the GST return he filed was valid and the Commissioner’s assessment was invalid.
Later that month, the Commissioner applied to strike out the originating application on the grounds that:
- Mr Cullen had no standing to bring the proceeding;
- the proceeding did not disclose a reasonably arguable cause of action because the Society did not exist during the period of alleged taxable activity;
- the Commissioner’s assessment was correct in all respects; and
- the originating application was an abuse of process.
Fitzgerald J in the High Court found against the Commissioner, and the Commissioner appealed.
Their Honours found that Fitzgerald J in the High Court asked the wrong question. Fitzgerald J asked: “to whom [does] the [GST] Return … relate?” and “who is ‘the taxpayer’ for the purposes of the Return…?” Instead, their Honours agreed with the Commissioner that the inquiry should have been confined to whether the Society was the taxpayer for the purposes of the return; and if Fitzgerald J had asked this question, only one answer was available – that no other entity could file a GST return in the Society’s name. Further, the Society was the only legal entity entitled to file a return and claim a refund for a taxable activity using that relevant number. Another party whether separately constituted by law or not, cannot use the registered person’s details to claim a refund. To allow such uncertainty in taxpayer identity would undermine the Commissioner’s statutory obligation to use her best endeavours to protect the integrity of the tax system.
Although the Commissioner accepted that she acted incorrectly in accepting GST returns filed by Mr Cullen in the Society’s name, the Court of Appeal also held that the Commissioner cannot be estopped by her previous errors of law from performing her statutory obligations to apply the revenue statutes correctly.
Their Honours also found that Mr Cullen had no standing or authority to issue the proceeding on behalf of the Society. The Official Assignee had control and custody of the Society’s assets (including a chose in action in bringing proceedings) from commencement of the liquidation on 17 June 2016. The Official Assignee never consented to Mr Cullen issuing this proceeding on the Society’s behalf.
The Court of Appeal allowed the Commissioner’s appeal and struck out the High Court proceedings.
Tax Administration Act 1994 s 6; Goods and Services Tax Act 1985 ss 16, 51; Companies Act 1993 ss 248, 260; Incorporated Societies Act 1908 s 26.