Last Passive Ltd (t/a Aircoach) v Revenue Cmrs
| Jurisdiction | Ireland |
| Judge | Mr. Justice Michael White |
| Judgment Date | 24 October 2014 |
| Neutral Citation | [2014] IEHC 685 |
| Court | High Court |
| Date | 24 October 2014 |
[2014] IEHC 685
THE HIGH COURT
BETWEEN
AND
TAXES CONSOLIDATION ACT 1997 S941
VALUE ADDED TAX CONSOLIDATION ACT 2010 S119(4)(K)
VALUE-ADDED TAX CONSOLIDATION ACT 2010
VALUE-ADDED TAX ACT 1972 S6
VALUE-ADDED TAX ACT 1972 SCHED 1 PARA 14(3)
EEC DIR 112/2006
VALUE-ADDED TAX ACT 1972 S12(1)(A)
VALUE-ADDED TAX ACT 1972 S12(4)
EEC DIR 388/1977 ART 17(5)
VALUE-ADDED TAX REGS 2006 SI 548/2006 REG 18(2)(A)
VALUE-ADDED TAX ACT 1972 S12(4)(A
VALUE-ADDED TAX ACT 1972 S12(1)
EEC DIR 388/1977 ART 17(5)(C)
ABBEY NATIONAL PLC v CUSTOMS & EXCISE CMSRS 2001 1 WLR 769 2001 STC 297 2001 AER (EC) 385 2001 ECR I-1361 2001 2 CMLR 28 (CASE C-408/98)
DIAL-A-PHONE LTD v CUSTOMS & EXCISE CMSRS 2004 EWCA CIV 603 2004 STC 987 2004 BTC 5581 2004 BVC 640 AER (D) 297 (MAY)
PORTUGAL TELECOM SGPS SA v FAZENDA PUBLICA 2013 STC 158 2012 STI 2832 2012 AER (D) 83 (SEP) (CASE C-496/11)
LENNARTZ v FINANZAMT MUNCHEN III 1995 STC 514 1991 ECR I-3795 1993 3 CMLR 689 1991 STI 700 (CASE C-97/90)
FINANZAMT FREISTADT ROHRBACH URFAHR v UNABHANGIGER FINANZSENAT AUSSENSTELLE LINZ 2014 STC 114 2014 CEC 231 2013 BVC 269 2013 STI 2300 AER (D) 267 (JUN) (CASE C-219/12)
MAYFLOWER THEATRE TRUST LTD v REVENUE & CUSTOMS CMSRS 2007 EWCA CIV 116 2007 STC 880 2007 BTC 5221 2007 BVC 190 2007 STI 413 2007 104 10 LSG 30 2007 AER (D) 281 (FEB)
VARZIM SOL - TURISMO, JOGO E ANIMACAO SA v FAZENDA PUBLICA 2012 STC 971 2012 STI 1605 (CASE C-25/11)
ROYAL BANK OF SCOTLAND GROUP PLC v REVENUE & CUSTOMS CMSRS 2009 STC 461 2008 ECR I-10409 2009 CEC 398 2009 BTC 5249 2009 BVC 248 2009 STI 89 2008 AER (D) 218 (DEC) (CASE C-488/07)
MARKS & SPENCER PLC v CUSTOMS & EXCISE CMSRS 2003 QB 866 2003 2 WLR 665 2002 AER (D) 183 (JUL) 2002 STC 1036 2002 ECR I-6325 2002 3 CMLR 9 2002 CEC 572 2002 BTC 5477 2002 BVC 622 2002 STI 1009 (CASE C-62/00)
NCC CONSTRUCTION DANMARK A/S v SKATTEMINISTERIET 2010 STC 532 2009 ECR I-10567 2010 BVC 1093 2009 STI 2832 2009 AER (D) 308 (OCT)
VOLKSWAGEN FINANCIAL SERVICES (UK) LTD v REVENUE & CUSTOMS CMSRS 2012 UKUT 394 (TCC) 2013 STC 716 2013 BVC 1501 2012 STI 3277 2012 AER (D) 281 (NOV)
BLP GROUP PLC v CUSTOMS & EXCISE CMSRS 1996 1 WLR 174 1995 STC 424 1995 ECR I-983 1995 2 CMLR 750 1995 AER (EC) 401 1995 BVC 159 (CASE C-4-94)
MIDLAND BANK PLC v CUSTOMS & EXCISE CMSRS 2000 1 WLR 2080 2000 STC 501 2000 ECR I-4177 2000 3 CMLR 301 2000 AER (EC) 673 2000 CEC 441 2000 BTC 5199 2000 BVC 229 2000 STI 852 (CASE C-98/98)
VALUE-ADDED TAX ACT 1972 S12
ST HELEN'S SCHOOL NORTHWOOD LTD v REVENUE & CUSTOMS CMSRS 2006 EWHC 3306 (CH) 2007 STC 633 2007 BTC 5059 2007 BVC 58 2007 STI 117
CAMPUS & STADIUM IRELAND DEVELOPMENT LTD v DUBLIN WATERWORLD LTD 2010 3 IR 234 2010/7/1672 2010 IESC 25
METROPOL TREUHAND WIRTSCHAFTSTREUHAND GMBH v FINANZLANDESDIREKTION FUR STEIERMARK 2002 ECR I-81 2004 BTC 5364 2004 BVC 424 2002 AER (D) 15 (JAN) (CASE C-409/99)
EUROPEAN COMMISSION v FRANCE 2001 ECR I-2667 (CASE C-404/99)
MARA v HUMMING BIRD LTD 1982 ILRM 421
EDWARDS (INSPECTOR OF TAXES) v BAIRSTOW 1956 AC 14 1955 3 WLR 410 1955 3 AER 48 1955 99 SJ 558
O CULACHAIN (INSPECTOR OF TAXES) v MCMULLEN BROTHERS LTD 1995 2 IR 217 1995 2 ILRM 498 1995/10/2953
BROSNAN v MUTUAL ENTERPRISES LTD 1997 3 IR 267 1998 1 ILRM 45 1997 ITR 413 1998/12/3956
CUSTOMS & EXCISE CMSRS v SOUTHERN PRIMARY HOUSING LTD 2003 EWCA CIV 1662 2004 STC 209 2004 BTC 5028 2004 BVC 88 2003 STI 2179 2003 147 SJLB 1367 2003 AER (D) 231 (NOV)
Revenue – S. 941 of the Taxes Consolidation Act 1997 – VAT Act 1972 – Appeal from the decision of Appeal Commissioner – Council Directive 2006/112/E.E.C.
Facts: The appellant had appealed the determination of the Appeal Commissioner on the point of law as to whether the Appeal Commissioner was correct in determining that the running costs of the appellant engaged in operating bus route servicing in the State, were not dual inputs giving rise to deduction under s. 12 (4) VATA 1972; that the foregoing conclusion was not to be called into question by reason of principles of fiscal neutrality and equal treatment, recoverability of VAT in relation to overheads on the basis of relative turnover of the advertising and passenger transport businesses.
Mr. Justice Michael White affirmed the determination of the Appeal Commissioner on the three points of law raised before the Court. The Court held that the goods or services in question must have a direct and immediate link with the taxable transactions and that only the amount of tax borne directly by the various costs components of a taxable transaction may be deducted. The Court found that it was a matter of fact to be determined whether there was a direct and immediate link with an exempt or non-exempt activity. The Court held that the Appeal Commissioner was correct in asserting that there must be a link between the inputs and taxable supply for deductibility.
JUDGMENT of Mr. Justice Michael White delivered on the 24th day of October 2014
1. The appellant to these proceedings, Last Passive Ltd. is a private limited liability company which trades as "Aircoach" and operates various bus routes servicing Dublin Airport from different locations within the State and Northern Ireland.
2. The respondent to these proceedings refused to accede to the appellant's claim for a refund of Value Added Tax (VAT) in the amount of €873, 268.30. The Appeals Commissioner heard the appeal of this decision between November, 2010 and May, 2012.
3. This case stated arises from the determination of the Appeals Commissioner on hearing that appeal and is brought under s. 941 of the Taxes Consolidation Act 1997 as applied to VAT by s. 119(4)(k) of the Value Added Tax Consolidation Act 2010 (as amended) ("the VATCA"). A number of questions of law arise in these circumstances.
4. The Appeal Commissioner found a number of facts admitted or proved. The appellant operates 59 coaches on its bus routes and employs approximately 200 staff. The appellant entered a contract ("the Contract") with Viacom Ltd. (now CBS Outdoor Limited) in relation to 43 of these coaches. Under the terms of this contract CBS Outdoor Limited obtained the right to sell to its customers the entitlement to place advertising on the exterior of the appellant's coaches, on the back of seats inside the coaches and in certain places at Aircoach bus stops. This contractual right was extended until April, 2014.
5. During the period of the contract the buses displayed advertisements on their exterior and interior while being driven on their various routes. The income derived from this advertising is considered by the appellant to be an important element of its turnover, however, the overall value of the contract with CBS Outdoor Ltd to the appellant, when compared to the income derived from passenger transport, is small. For example, for the year ended 31 st March, 2009, 2% of the appellant's turnover was derived from advertising but 98% from the transport of passengers.
6. The claim made in this case relates to a period before the enactment of the Value Added Tax Consolidation Act 2010 ("VATCA 2010"). The relevant applicable legislation is the VAT Act 1972 (" VATA") which has now been revoked by the VATCA 2010. Under s. 6 of the VATA and para. (xiv)(3) of the First Schedule to the VATA the appellant's supply of passenger transport is exempt from VAT. This provision was inserted in order to ensure the State's compliance with Art 371 of Council Directive No. 2006/112/EC. Sections 2 and 5 of the VATA however provide that the appellants' supplies of advertising are taxable.
7. Section 12(1)(a) of the VATA 1972 provides:-
"In computing the amount of tax payable by him in respect of a taxable period, a taxable person may, insofar as the goods and services are used by him for the purposes of his taxable supplies or of any of the qualifying activities, deduct...
(i) the tax charged to him during the period by other taxable persons by means of invoices, prepared in the manner prescribed by regulations, in respect of supplies of goods or services to him..."
8. Section 12(4) of the VATA 1972, as inserted by s.112(b) of the Finance Act 2000, provides
a "(a) 'deductible supplies or activities' means the supply of taxable goods or taxable services, or the carrying out of qualifying activities as defined in subsection (1)(b);
'dual-use inputs' means goods or services (other than goods or services on the purchase or acquisition of which, by virtue of subsection (3), a deduction of tax shall not be made) which are not used solely for the purposes of either deductible supplies or activities or non-deductible supplies or activities;
'non-deductible supplies or activities' means the supply of goods or services or the carrying out of activities other than deductible supplies or activities; 'total supplies and activities' means deductible supplies or activities and non-deductible supplies or activities.
(b) Where a taxable person engages in both deductible supplies or activities and non-deductible supplies or activities then, in relation to that person's acquisition of dual-use inputs for the purpose of that person's business for a period, that person shall be entitled to deduct in accordance with subsection (1) only such proportion of tax, borne or payable on that acquisition, which is calculated in accordance with the provisions of this subsection and regulations, as being attributable to that person's deductible supplies or activities and such proportion of tax is, for the purposes of this subsection, referred to as the 'proportion of tax deductible'.
(c) For the purposes of this subsection and regulations, the...
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