Inspector of Taxes v Cablelink Ltd
| Jurisdiction | Ireland |
| Judge | Lavan J. |
| Judgment Date | 14 February 2003 |
| Neutral Citation | [2003] IEHC 625 |
| Court | High Court |
| Docket Number | [No. 374 R./2002] |
| Date | 14 February 2003 |
[2003] IEHC 625
THE HIGH COURT
BETWEEN
AND
AND
Citations:
INCOME TAX ACT 1967 S428
VALUE ADDED TAX ACT 1972 S25(2)
VALUE ADDED TAX ACT 1972 S23
FINANCE ACT 1986 S91(C)
FINANCE ACT 1991 S87(2)
VALUE ADDED TAX ACT 1972 S1
INSPECTOR OF TAXES (MARA) V HUMMINGBIRD LTD 1982 ILRM 421
BRITISH AIRWAYS PLC V CUSTOMS & EXCISE CMMSR 1990 STC 643
CUSTOMS & EXCISE CMMSR V UNITED BISCUITS (UK) LTD T/A SIMMERS 1992 STC 325
CARD PROTECTION PLAN LTD V CMMSR OF CUSTOMS & EXCISE C-349/96 ECJ
CUSTOMS & EXCISE V MADGETT & BALDWIN 1998 ECR I-0000 PAR 24
BROSNAN V MUTUAL ENTERPRISES 1997 3 IR 257
INSPECTOR OF TAXES (EDWARDS) V BAIRSTOW 1956 AC 14
INSPECTOR OF TAXES (O'CUALACHAIN) V MCMULLEN BROS LTD 2000 5 ITR 203
INSPECTOR OF TAXES (BROSNAN) V CORK COMMUNICATIONS LTD 1988 – 1989 4 ITR 349
Synopsis:
REVENUE
Case stated
Whether various findings of fact made by Appeal Commissioners were absurd or such that no reasonable judge or Commissioner could have reached them - Income tax Act, 1967, section 428 - Value Added Tax Act, 1972, section 25(2)
(2002/374R - Lavan J - 14/02/2003)
Inspector of Taxes v Cablelink Ltd
The Appeal Commissioners stated a case for the opinion of the High Court under the provisions of s.428 of the Income Tax Act, 1967 as applied to V.A.T. The question for determination was whether certain fees received by Cablelink were liable to V.A.T. The issue was whether the various findings of fact made by the Appeal Commissioners were absurd or such that no reasonable judge or Commissioner could have reached those conclusions.
Held by Lavan J. in upholding the decision of the Appeal Commissioner that the various findings of fact were not absurd or such that no reasonable judge or Commissioner could have reached those conclusions.
JUDGMENT of Lavan J. delivered the 14th of February, 2003.
This is a case stated by the Appeal Commissioners for the opinion of the High Court under the provisions of s.428 of the Income Tax Act, 1967, as applied to Value Added Tax by s.25(2) of the V.A.T. Act, 1972, as amended.
At hearings before the Appeal Commissioners on 13 th June, 1994 and on 30 th September, 1994, Cablelink Limited, Cablelink Waterford Limited and Galway Cable Vision Limited (hereinafter referred to as "Cablelink") appealed against the decisions of the Inspector of Taxes refusing a VAT repayment claimed for the period March/April, 1989 and raising s.23 estimates for the periods March/April, 1989 and September/October, 1991.
The question for determination by the Appeal Commissioners was whether the fee received by Cablelink in respect of the connection/reconnection of the customer to their cable television or MMDS (Multi-Channel Microwave Distribution System) for the purposes of receiving communication signals was in respect of:-
(a) A service consisting of work on immovable goods, or
(b) A service consisting of the development of immovable goods where the value of movable goods (if any) provided in pursuance of an agreement in relation to such service does not exceed two-thirds of the total amount on which tax is chargeable in respect of the agreement, or
(c) A service consisting of the maintenance and repair of immovable goods including the installation of fixtures, where the value of movable goods (if any) provided in pursuance of an agreement in relation to such service does not exceed two-thirds of the total amount on which tax is chargeable in respect of the agreement, or
(d) The provisions of telecommunications signals.
The services at (a) were liable to VAT at 10% in March/April, 1989, and 12.5% in September/October, 1991. The services at (b) and (c) were liable at 1O% in both these periods.
The rates of VAT applicable to the provision of services at (d) were 25% in March/April, 1989, and 21% in September/October, 1991.
Paragraph (xiib) Sixth Schedule (inserted by Finance Act, 1986, s. 91 (c):
"Services consisting of work on immovable goods, other than services consisting of such work specified in paragraph (xiv) and services specified in paragraph (Hi)."
The services specified in paragraph (xiv) are agricultural services which have no application to the present case, and those specified in paragraph (iii) were:
"Services consisting of the development of immovable goods, and the maintenance and repair of immovable goods including the installation of fixtures, where the value of movable goods (if any) provided in pursuance of an agreement in relation to such services does not exceed two-thirds of the total amount on which tax is chargeable in respect of the agreement."
Paragraph (xiib) Sixth Schedule as inserted by s. 87(2) of the Finance Act, 1991:
a "(a) services consisting of work on immovable goods, other than services specified in-
(i) subparagraph (b) or paragraph (xiv), or
(ii) paragraph (ii) of the Third Schedule..."
The services specified in subpara. (b) are cleaning services, and the services specified in para, (xiv) are agricultural services, neither of which have application to the present case.
Paragraph (ii) of the Third Schedule:
"services, other than services specified in paragraph (xiv) of the Sixth Schedule, consisting of the development of immovable goods and the maintenance and repair of immovable goods including the installation of fixtures, where the value of movable goods (if any) provided in pursuance of an agreement in relation to such services does not exceed two-thirds of the total amount on which tax is chargeable in respect of the agreement."
Based upon evidence adduced at the hearing of the appeal, the following findings of fact were mad:-
(1) The respondent companies are Irish incorporated;
(2) Cablelink supplies television and radio signals through cable which may be run overground and also underground or through the MMDS system;
(3) Where overground cables are supplied, a main cable is run along the eaves from one house to the next and, in order to make a connection into an individual house, a drop cable is run from a junction box at the eaves level. That drop cable goes to, for example, a living room window where it is brought into the house and attached to a small connection box on the window sill or somewhere adjacent thereto. The connection box is approximately the size of a cigarette packet. The drop cable is fixed to the external wall by cable clip (a small nail and a plastic bridge) or screws. The junction box is attached to the eaves of the building by screws.
(4) Where underground cables are used, the main cable system is run under the street rather than through the customers" properties and there are a number of junction boxes from which separate cables will be run into each house. The cable is normally installed as the house is constructed, usually with the agreement of the builder. It is brought above ground by ducting into a point in the living room where a terminal box is mounted on the wall from which a connection is made to a television or radio.
(5) The MMDS system requires the installation of an antenna and down converter on the roof of the customer's house. A cable is installed from the antenna/down convertor to the decoder and from the decoder into the television set. The decoding box is not attached or in any way affixed to the customer's premises.
(6) The objective of both cable-type systems and the MMDS system is to deliver multi-channel television reception. The delivery systems are different for the same product.
(7) Cablelink would not install connection boxes or provide decoder boxes without subscription for the multi-channel television service.
(8) The installations remain in the ownership of Cablelink.
(9) Neither the underground cable nor the overground main cable is removed when service is withdrawn from a customer.
2 It is Cablelink's policy not to re-use overground cable removed from customer's premises although it could be re-used.
(10) Connection boxes and decoder can be removed from customer's premises without damaging them. It is Cablelink's policy not to re-use connection boxes but to re-use decoders.
(11) The Department of Communications has statutory authority to separately regulate rental charges and installation charges for cable systems.
(12) The subscriber enters into an agreement with Cablelink. The respective agreements form part of the case stated.
(13) The installation work may not be done other than by Cablelink or its agents.
(1) Cablelink engages in the development of immovable goods including the installation of fixtures.
(2) Cablelink carries on two separate activities- firstly, the supply of a connection to the house and, secondly, the supply of the signal. It was argued that in the agreement that the subscriber signs, there is separate provision for the installation charge and for the charge in respect of the supply of the signal. Immovable goods are developed by bringing piped television to the house.
(3) Cablelink supplies fixtures because of the type of connection boxes and cabling supplied.
(1) There is no supply of fixtures.
(2) There is no development of immovable goods.
(3) There are not two separate supplies, rather there is one supply, namely, the supply or provision of telecommunication signals.
The nature of the physical items supplied as part of the service by Cablelink does not constitute a...
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