Saatchi and Saatchi Advertising Ltd v McGarry

JurisdictionIreland
JudgeMr. Justice Barrington
Judgment Date28 April 1998
Neutral Citation1998 WJSC-SC 12023
CourtSupreme Court
Docket Number[S.C.
Date28 April 1998

1998 WJSC-SC 12023

THE SUPREME COURT

Barrington, J.

Keane, J.

Lynch, J.

259/96
SAATCHI & SAATCHI ADVERTISING LTD. v. McGARRY (INSPECTOR OF TAXES)
Between/:
SAATCHI & SAATCHI ADVERTISING LIMITED
Appellant

and

KEVIN McGARRY (INSPECTOR OF TAXES)
Respondent

Citations:

FINANCE ACT 1980 S39

FINANCE ACT 1990 S41(1)(b)

FINANCE ACT 1980 S39(2)

O CULACHAIN V HUNTER ADVERTISING LTD 4 ITR 35

FINANCE ACT 1980 S41(8)

CAPE BRANDY SYNDICATE V IRC 1921 1 KB 64

REVENUE COMMISSIONERS V DOORLEY 1933 IR 750

Synopsis:

Practice and Procedure

Manufacturing tax relief; interpretation of statute; whether advertising qualified for such relief; s.41(1)(b) Finance Act, 1990 meant advertising qualified for manufacturing relief under s.39 Finance Act, 1980; whether plaintiff's claim barred under s.41(8) 1980 Act; whether such a procedural provision could defeat the purpose of the 1990 Act

Held: Tax legislation must be read literally; claim dismissed

Saatchi and Saatchi Advertising Ltd. v. McGarry - Supreme Court: Barrington J., Keane J., Lynch J. - 28/04/1998 - [1998] 2 IR 562

1

Mr. Justice Barrington delivered on the 28th day of April, 1998. [NEM DISS]

2

This case stated raises a net point of law.

3

The Appellant carries on the business of an Advertising Agency. In the course of its business it makes, inter alia, advertising films for display on television. The question at issue is whether profits deriving from this aspect of the Appellant's work qualify for manufacturing relief under Section 39 of the Finance Act, 1980as amended by Section 41 (1) (b) of the Finance Act, 1990. The question arises in relation to the accounting periods ended 30th September 1981 to the 30th September, 1989 (inclusive).

4

Section 39 of the Finance Act, 1980is in Chapter 6 of that Act which deals with relief in respect of certain income of manufacturing companies. It defines "goods" as meaning goods manufactured within the State in the course of trade. S.S.2 however provides that certain services which include the subjecting of commodities or materials to any process of manufacturing may qualify as "goods" for the purposes of the Act. It reads as follows:-

5

(2) Where a company carries on a trade which consists of or includes the rendering to another person of services by way of subjecting commodities or materials belonging to that person to any process of manufacturing, the following provisions shall apply for the purpose of relief under this Chapter-

6

(a) the rendering within the State of such services shall be regarded as the manufacture within the State of goods,

7

(b) any amount receivable in payment for services so rendered shall be regarded as an amount receivable from the sale of goods, and

8

(c) the inspector may by notice in writing require a company claiming relief from tax by virtue of this subsection to furnish him with such information or particulars as may be necessary for the purpose of giving effect to this subsection, and section 41(2) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

9

In the case of ÓCulacháin v. Hunter Advertising Ltd. (Irish Tax Reports page 37) Murphy, J. held, in the High Court, that the relief granted by Section 39 of the 1980 Act did not extend to Hunter Advertising Ltd. which, like the Appellant in the present case, made short advertising films for use on television. We are informed by Counsel that while an appeal on behalf of Hunter Advertising Ltd. was still pending to the Supreme Court against the decision of Murphy, J. the Oireachtas enacted Section 41(1) (b) of the Finance Act, 1990one of the purposes of which, we are told, was to reverse the effect of Murphy, J's decision.

10

Counsel have agreed that the relevant portion of Section 41 of the 1990 Act for the purposes of the present case is sub-section (1) (b) ( 1CC5) which reads as follows:-

11

a (ICC5) (a) In this subsection "film" means a film which is produced-

12

(i) on a commercial basis with a view to the realisation of profit.

13

(ii) wholly or principally for exhibition to the public in cinemas or by way of television broadcasting or for training or documentary purposes,

14

and in respect of which not less than 75 per cent. of the work on the production of which is carried out in the State.

15

(b) The following provisions shall apply, and shall be deemed always to have applied, for the purposes of relief under this Chapter in relation to a company carrying on a trade which consists of or includes the production of a film:

16

(i) the production of the film by the company claiming the said relief shall be regarded as the manufacture within the State of goods.

17

(ii) any amount receivable for the said production shall be regarded as an amount receivable from the sale of goods, and

18

(iii) subsection (ID) shall have effect as respects the company in relation to a claim by it for relief from tax by virtue of this subsection as it has effect as respects a company in relation to a claim by it for relief from tax by virtue of subsection (IB) or (IC).

19

The effect of the amendment quoted was, inter alia, to make eligible for relief companies such as the Appellant and Hunter Advertising Ltd., and we are informed that Hunter Advertising Ltd, did in fact obtain relief under the Section. The Appellant was however confronted by the provisions of Section 41 s.s.8 of the Finance Act, 1980which provides as follows:-

20

(8) A company shall not be entitled to relief under this Chapter in relation to a trade as respects a relevant accounting period unless it makes a claim for the relief under subsection (2) before the date on which the assessment for...

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