Quigley v Revenue Commissioners and Another

• Jurisdiction: Ireland
• Judge: Ms. Justice Siobhán Phelan
• Judgment Date: 10 May 2023
• Neutral Citation: [2023] IEHC 244
• Docket Number: [Record No: 2022/186 JR]
• Court: High Court

Between:

Michael Quigley

Applicant

and

Revenue Commissioners and The Tax Appeal Commission

Respondents

[2023] IEHC 244

[Record No: 2022/186 JR]

THE HIGH COURT

JUDICIAL REVIEW

JUDGMENT of Ms. Justice Siobhán Phelan, delivered on the 10 ^th day of May, 2023.

INTRODUCTION

1 . Marked gas oil (sometimes also referred to as marked mineral oil, green diesel, agricultural diesel or MMO) [hereinafter “MGO”] is diesel that is intended for use for heating or in agricultural machinery, and, because of that, it is chargeable at a lower rate of excise duty and subject to a lower rate of valued added tax (“VAT”). The sale of marked gas is governed by s. 99(1) of the Finance Act, 2001 [hereinafter “the 2001 Act”] which provides that a rebated rate of excise applies for MGO once certain specified conditions are complied with.

2 . Persons engaged in illegal fuel-laundering operations are known to use “ bleaching agents” to remove the dye from MGO. This enables the oil to be passed-off as regular diesel, but without payment of the higher excise duties and VAT which apply to regular diesel. Proper record-keeping is required for the Revenue Commissioners [hereinafter “Revenue”] to verify that a sale of MGO complies with statute and that the fuel has not been ‘laundered’. Where a trader cannot show that his sales of MGO comply with these requirements, a suspicion arises that the fuel has been laundered. The fuel laundering/illicit fuel industry typically requires a customer base, a supply of MGO and a distribution network through which to bring the laundered fuel to the end user, who may be an unsuspecting retail customer.

3 . In order to ensure traceability of sales and to enable Revenue to verify that the MGO is being used for a permitted purpose and in compliance with the statutory scheme, a fuel trader dealing in MGO is required to hold a licence issued by Revenue, and to abide by any conditions specified in the licence. The trader is also required to keep records of MGO sales in accordance with the Regulations. The Applicant, who was a licensed fuel trader, was required to comply with these regulatory controls as to record keeping in respect of his trade in MGO.

4 . Assessments to both VAT and excise duty (in the total amount of €1,012,33 7.85 in respect of excise duty for the period between 2009 and 2016 and the cumulative sum of €636,842.00 in respect of a VAT liability for a similar period) were raised by Revenue against the Applicant following an investigation involving 700 of the Applicant's accounts in circumstances where alleged inadequacies in the Applicant's record keeping meant some 300 customers could not be identified by Revenue. In addition, interviews by Revenue with a proportion of the remaining 400 customers who could be identified caused Revenue to question the accuracy of records relating to the sale of MGO in many of those cases. In consequence, Revenue was not satisfied that conditions of eligibility were met with a resulting liability to both excise duty and VAT.

5 . The Applicant has appealed against these assessments to the Tax Appeals Commission. During the course of the appeal process Revenue provided the Applicant with a schedule of the names of the 300 customers in respect of whom it is said records are inadequate to permit proper identification of the customer (e.g. typically names without full address) but has refused to provide the Applicant with information regarding those customers (some 44 of the remaining 400 customers who were identifiable) who Revenue not only identified but interviewed, many of whom are alleged to deny buying MGO from the Applicant.

6 . These proceedings concern the refusals of the Revenue and the Tax Appeal Commission respectively to furnish and/or to direct the furnishing of the names, details and particulars of the 44 customers the Revenue had interviewed in the course of its investigation in relation to sale of MGO by the Applicant. Revenue maintain that the records sought are not relevant where on the Applicant's appeal it is a matter for him to establish that he has complied with regulatory controls as to record keeping which condition the entitlement to the tax rebate on the sale of MGO and to demonstrate to the Tax Appeals Commission of an entitlement to relief from excise duty. The issue for determination in these proceedings is whether the information sought by the Applicant in relation to the interviews with customers who deny buying MGO from the Applicant is required to vindicate his right to fair procedures in the appeal process before the Tax Appeals Commissioner.

BACKGROUND

7 . The Applicant operated a fuel trader's business pursuant to a Marked Fuels Trader's License (“MFTL”) and an Auto Fuel Trader's License (“AFTL”) issued by Revenue. He underwent an audit by Revenue in or about May, 2015. On the 28 ^th of May, 2015 Revenue wrote to the Applicant. An Appendix to that letter contained details (copy invoices/delivery dockets) of 66 supplies which the Applicant purported to make in August 2013, as drawn from his own records/invoices. He was asked to provide full information in respect of the persons supplied, as required by the Mineral Oil Tax Regulations, 2012 [hereinafter “the 2012 Regulations”]. In a reply of the 9 ^th of June, 2015 the Applicant contended that the invoices contained all the necessary details. The Applicant was subsequently refused a renewal of his MFTL and AFTL on the 2 ^nd of December, 2016. He has appealed that refusal decision to the Tax Appeals Commission and this appeal has not yet been determined or scheduled for hearing.

8 . Revenue raised 7 separate assessments to excise duty on the 15 ^th of May, 2017. These assessments are for separate chargeable periods dating from 2009 until 2016 and are in a total sum of €1,012,337.85 17. The letter from Revenue to the Applicant in relation to the excise assessments states:

“Based on a Revenue site visit to your address at Castleroche on 28 May 2014, a number of records were removed and analysed over subsequent months. Revenue has contacted a number of purported marked mineral oil customers, over several tranches in a phased period of time corroborating purported sales recorded in your mineral ail business.

It was established in the course of the license review and Revenue enquiries, that in all, Revenue estimate 2,700,729 litres of Marked Oil purchased by you has not been used for the purpose or specific manner as allowed for under section 99 Finance Act 2001. Section 99(10) of the Finance Act 2001 (as substituted by section 93(I)(d) of the Finance Act 2010) provides that where a person has received excisable products on which excise duty has been relieved, rebated, repaid or charged at a rate lower than the appropriate standard rate, subject to a requirement that such excisable products are used for a specific purpose or in a specific manner, and where such requirements has not been satisfied, or any requirement of excise law in relation to the holding or delivery of such excisable products has not been complied with, and it is not shown to the satisfaction of the Revenue Commissioners that the excisable products have been used, or are held for use, for such purpose or in such manner then:

The person who has received such excisable products or who holds them for sale or delivery is liable for payment of the excise duty on such products at the rate appropriate to them, without the benefit of any relief, rebate or lower rate.

It is clear from the above that where any person has received Marked Mineral Oil in the course of trading, and has contravened any requirements of excise law; is unable to show to the satisfaction of the Revenue Commissioners, that the Marked Mineral oil in question was used for a specific purpose or in a specific manner, that person is liable for excise duty: in respect of the product in question, at the standard rate of excise duty.

It is clear from the matter set out in this letter that: (i) you received excisable products (Marked Mineral Oil), on which excise duty has been charged at a rate lower than the appropriate standard rate, subject to a requirement that such excisable products are used for a specific purpose or in a specific manner, and (ii) requirements of excise law in relation to the holding or delivery of such excisable products have not been complied with, and (iii) it has not been shown to the satisfaction of the Revenue Commissioners that the excisable products have been used, for such purpose or in such manner.

Accordingly, you are liable for payment of the excise duty on the mineral oil in question, at the rate appropriate to it, without the benefit of any relief, rebate or lower rate”.

9 . Revenue further raised VAT assessments on the 2 ^nd of August, 2017. These assessments are for chargeable periods dating from 2009 until 2016 in the total amount of €636,842.00. In a letter dated the 27 ^th of July, 2017 from Revenue to the Appellant in relation to the VAT Assessments it is stated:

“It is clear from the matters set out in attached letter 15.05.2017 that:

• (i) you received excisable products (Marked Mineral Oil), on which excise duty has been charged at a rate lower than the appropriate standard rate, subject to a requirements that such excisable products are used for a specific purpose or in a specific manner, and

• (ii) requirements of excise law in relation to the holding or delivery of such excisable products have not been complied with, and

• (iii) it has not been shown to the satisfaction of the Revenue Commissioners that the excisable products have been used, for such purpose or in such manner.

The above matters have now been reviewed, in relation to Value Added Tax. You have failed, despite numerous requests, to supply full details of the persons, entities to whom the marked mineral oil was supplied. I have concluded, having regard to all the...