Green & Company v Revenue Commissioners

• Jurisdiction: Ireland
• Judgment Date: 16 November 1927
• Date: 16 November 1927
• Court: Supreme Court (Irish Free State)

High Court.

Supreme Court.

Green & Co. v. Revenue Commrs.

J. W. GREEN and CO., Limited

Appellants

and

THE REVENUE COMMISSIONERS, Respondents (1)

Revenue - Excess profits duty - Final accounting period - Claim to relief -"Trading stock in hand" - "Forward stock" - Finance Act, 1921 (11 & 12 Geo. 5, c. 32), sects. 35 and 38, Second Schedule, Part II, Clause 1.

Case Stated under the Finance (No. 2) Act, 1915, sect. 45 (5), Rule 9, of Part IV of the Second Schedule to the Finance Act, 1921, and the Taxes Management Act, 1880, sect. 59, by the Commissioners for the Special Purposes of the Income Tax Acts for the opinion of the High Court of Justice.

The case stated was as follows:—

"1. At meetings of the Commissioners for the Special Purposes of the Income Tax Acts, held on the 22nd February, 1924, at Cork, and on the 12th June, 1924, at Dublin, for the purpose of hearing appeals, Messrs. J. W. Green & Co. (Cork), Limited (hereinafter referred to as 'the appellants'), appealed against the determination of the Revenue Commissioners that the goods comprised in certain contracts were not trading stock in hand on the 31st August, 1921, within the meaning of Rule 1 of Part II of the Second Schedule to the Finance Act, 1921, and must, therefore, be excluded from the appellants' claim for allowance under that part of the Second Schedule to the Act.

2. The grounds of the appeal were:—

That the goods comprised in the said contracts had, in pursuance of the said contracts, legally become the property of the appellants prior to the 31st August, 1921:

That the said goods had, in accordance with the usages and customs of the corn trade, become the property of the appellants prior to the 31st August, 1921; and that such portions of the said goods as had not been disposed of until after the 31st August, 1921, were trading stock in hand on the 31st August, 1921, within the meaning of Rule 1 of Part II of the Second Schedule to the Finance Act, 1921.

3. At the hearing of the appeal, counsel on behalf of the appellants intimated that it was not proposed to pursue the appeal in so far as certain of the contracts were concerned.

4. The remaining contracts specified hereunder accordingly formed the subject matter of the appeal:—

Goods on Board of.	Contract entered into by or on behalf of.	Date of Contract or Contracts.	Date of Bill or Bills of Lading.
S.S. 'Baltimore Maru'	Messrs. R. & H. Hall, Limited	27th June, 1921 29th June, 1921	30th July, 1921
S.S. 'Australpeak'	Do.	28th July, 1921	18th Aug., 1921
S.S. 'Dunaff Head'	Do.	16th June, 1921	31st Aug., 1921
Do.	Appellants	29th July, 1921	29th Aug., 1921
S.S. 'Erlesburgh'	Messrs. R. & H. Hall, Limited	12th Aug., 1921	19th to 26th July, 1921
S.S. 'Lowlands'	Do.	5th Aug., 1921	10th Aug., 1921 15th Aug., 1921
S.S. 'Southgate'	Appellants.	9th Aug., 1921	19th Aug., 1921

5. The appellants carry on in Cork the business of grain merchants and importers. They buy grain to meet the requirements of millers in Cork and district. Maize is bought in whole cargoes, and wheat in whole cargoes, and occasionally in half cargoes.

6. The grain usually passes from the growers into the hands of large operators, who hold stocks abroad. The grain is bought from these operators through London and Liverpool agents at a price inclusive of cost, insurance, and freight to Cork, by the appellants, or by Messrs. R. &. H. Hall, Limited, between whom and the appellants a standing arrangement exists for sharing the goods comprised in all grain contracts entered into by either of them.

7. During the period of Food Control up to the 31st March, 1921, cargoes of grain were distributed by the Wheat Commission between the appellants and two other grain merchants in Cork in the following proportions:—

Appellants	47	per cent.
Messrs. R. & H. Hall, Ltd.	47	,, ,,
Messrs. E. M'Donnell & Co.	6	,, ,,

8. By mutual agreement between these three grain merchants this method of distribution of cargoes, and part cargoes, of grain had been continued since the removal of the control up to the present time.

9. Appellants and Messrs. R. & H. Hall, Limited, enter, in rotation, into contracts for cargoes, or part cargoes, of grain; and each of them in turn, immediately following the making of the contract, sells 47 per cent. thereof to the other, no charge being made for expenses, and sells 6 per cent. thereof to Messrs. E. M'Donnell & Company, who are charged one-half of one per cent. on the amount of their purchase for expenses.

10. In the case of each contract a 'Sold Note,' in the form ordinarily used, is issued by either the appellants or by Messrs. R. & H. Hall, Limited, indicating that 47 per cent. of the quantity contracted for has been sold to the other. [A copy of each of these 'Sold Notes' was attached, and formed part of this case.]

11. Immediately upon receipt of a notice of appropriation from their sellers by either the appellants or by Messrs. R. & H. Hall, Limited, a copy of such notice is transmitted to the other.

12. No grain contract is entered into either by the appellants or by Messrs. R. & H. Hall, Limited, without the knowledge and agreement of the other as regards price and quantity.

13. In the usual course of business the appellants or Messrs. R. & H. Hall, Limited, having completed a contract to purchase a cargo, or half of a cargo, of grain, inform their customers, the millers in Cork and district, and sell forward, before the arrival of the grain, as much of it as possible—usually about three-fourths or three-fifths. Some of the balance may be sold while the ship is at sea, some on its arrival in Cork, and some after it has been stored in Cork. For example, in the case of the cargo of the S.S. 'Southgate,' the contract in respect of which was made by the appellants on the 9th August, 1921 (see paragraph 4), the quantity of maize invoiced was about 5,450 tons, of which about 4,691 tons was, on or before the 31st August, 1921, already contracted to be sold by them; an additional 524 tons was sold in September, 1921, before the arrival of the ship in Cork; and the remainder, about 235 tons, was sold from the stores in Cork. [A statement showing the manner in which this cargo was disposed of was annexed, and formed part of this case.]

14. The goods forming the subject-matter of this appeal were not in the actual possession of the appellants or of Messrs. R. & H. Hall, Limited, on the 31st August, 1921, being abroad or at sea on that date; and no bills of lading, invoices, or insurance policies or certificates in relation to such goods had been tendered or delivered to the appellants or to Messrs. R. & H. Hall, Limited, on or before that date.

15. In ascertaining their stock in hand on the 31st August, 1921, the appellants included stock which they did not normally include when preparing their balance sheets. Their usual practice was to include only stock which had actually been paid for; but, for the purpose of their claim under Part II of the Second Schedule of the Finance Act, 1921, appellants also included the portions unsold on 31st August, 1921, of all stock for which contracts had been signed on or before that date.

16. At the appeal meeting, as stated in paragraph 3, the appellants abandoned their claim in relation to certain of the contracts the bills of lading in respect of which were not dated until after the 31st August, 1921.

17. The facts and circumstances regarding the several contracts specified in paragraph 4 as forming the subject-matter of the appeal are as detailed in the following parts, numbered I to VII of this case. [Parts I to VII here follow.]

. . . . . . . .

84. It was contended by counsel on behalf of the appellants, that the property in the goods comprised in the contracts referred to in Parts IV and VII of this case, and the property in appellants' share of the goods comprised in the contracts referred to in Parts I, II, III, V, and VI of this case, had passed to the appellants on or before the 31st August, 1921; and that, accordingly, the unsold portions of the goods comprised in such contracts, or shares of contracts, were trading stock in hand on that date within the meaning of Rule 1 of Part II of the Second Schedule to the Finance Act, 1921.

85. This contention was resisted by the representative of the Revenue Commissioners.

86. We, the Commissioners, who heard the appeal, gave our determination as follows:—

Having carefully considered the evidence and arguments submitted to us, we have come to the conclusion of law that the expression 'trading stock in hand' of the owner of a trade or business in Rule 1 of Part II of the Second Schedule to the Finance Act, 1921, means trading stock in the possession of the owner of the trade or business.

The expression 'trading stock in hand' is not defined in the said Act, but it is also used in Part I of the Second Schedule of the said Act, and we are of opinion that it has the same meaning in each of these parts of the schedule. Rule 5 (4) of Part I furnishes some indication of the sense in which the expression is used; because it provides, in effect, that trading stock which had not come into his possession until after the expiration of any period, is not to be treated as if it were trading stock in hand in that period. From this, we infer that trading stock in hand on any date is confined to trading stock which was in the possession of the owner of a trade or business on that date.

We are of opinion that the word 'possession,' in the said Rule 5 (4), is used in its ordinary sense, and not in the sense in which the word is used in the Sale of Goods Act, 1893; and we are supported in this view by the judgment of Mr. Justice Sankey, in the King's Bench Division in England, on the 21st July, 1923, in the case of Neville, Reid, & Company, Limited,v. Commissioners of Inland Revenue(1).

We find as a fact that none of the goods comprised in the...