Arderne Scott Thesen Ltd v Cape Provincial Administration

• Jurisdiction: South Africa
• Judge: Curlewis CJ, Stratford JA, Beyers JA, De Wet JA and Watermeyer AJA
• Judgment Date: 21 September 1937
• Citation: 1937 AD 429
• Court: Appellate Division

Curlewis, C.J.:

The respondent (plaintiff in the court below) issued summons against appellants (defendants in the court below) in the Cape Provincial Division for payment of an amount of £310 5s., being the balance of importer's licence due and payable by the company in terms of the provisions of Ordinance 19 of 1930 (Cape), as amended by Ordinance 19 of 1936 (Cape), in respect of goods imported by the company into the Province of the Cape of Good Hope during the period 1st January, 1936, to 30th September, 1936. Thereupon a special case was drawn up, signed by counsel and attorneys of both parties, and was submitted to the court below for decision. The special case was as follows:-

"1. Plaintiff is Johannes Hendrik Conradie in his capacity as Administrator of the Cape Province.

"2. Defendant is Arderne, Scott, Thesen Limited, a company of limited liability incorporated and registered under the laws of the Union relating to companies, having its registered office at Woodstock, C.P., and having no branches outside the Cape Province.

"3. During the period 1st January to 30th September, 1936, defendant imported into the Cape Province goods from beyond the borders of the Union to the value of £69,829.

"4. This amount represents the value of (a) goods imported for sale within the Cape Province and sold within the Cape Province; (b) goods imported and used by defendant for manufacturing

Curlewis, C.J.

purposes, for subsequent sale in manufactured form within the Cape Province, and sold within the Cape Province; (c) goods imported and used by defendant for the purpose of construction, for subsequent sale in constructed form within the Cape Province and sold within the Cape Province; (d) goods imported for sale in the Cape Province to persons outside the Cape Province and sold to such persons; (e) goods imported and used by defendant for manufacturing purposes for subsequent sale in the Cape Province in manufactured form to persons outside the Cape Province, and odd to such persons; (1) goods imported and used by defendant for the purpose of construction for subsequent sale in the Cape Province, and sold to such persons; (g) goods imported for sale outside the Cape Province and sold outside the Cape Province; (h) goods imported and used by defendant for manufacturing purposes for subsequent sale in manufactured form outside the Cape Province and sold outside the Cape Province; (i) goods imported and used by defendant for the purpose of construction for subsequent sale in constructed form outside the Cape Province and sold outside the Cape Province; (j) goods imported and used for manufacturing purposes and not for subsequent sale in manufactured form; (k) goods imported and used for the purpose of construction and not for subsequent sale in constructed form; (1) goods imported to maintain and increase stocks without any specific intention at the time to allot them to any of the several purposes set out in heads (a) to (k) of this paragraph but with the intention that they will ultimately be so allotted; - (m) goods imported for each of the purposes set out in heads (a) to (1) above but not yet used for manufacture or construction and/or sold.

"5. It was not possible to specify, when the said goods were imported into the Province, the quantity or value thereof which would ultimately fall under heads (a) to (m), inclusive, of paragraph 4 respectively.

"6. In terms of Ordinance 19 of 1930, as amended, and the regulations in force under the said Ordinances, defendant, under protest and with reservation of its rights, has filled in Form No. 786 as required by the said Ordinances, in respect of the goods imported as aforesaid. A copy of the completed form is attached hereto marked X.

"7. The Receiver of Revenue, Cape Town, as the duly

Curlewis, C.J.

authorised agent of the plaintiffs has assessed defendant for the sum of 9310 5s as being due and payable for importer's licence duty in respect of the goods imported as aforesaid. A copy of the assessment is attached hereto marked Y.

"8. The Receiver of Revenue, Cape Town, as the duly authorised agent of the plaintiff, has demanded from defendant payment of the said sum of £310 5s., but defendant refuses to pay the said sum or any portion thereof.

"Plaintiff contends:-

"(a) That defendant is liable to pay licence duty in terms of Ordinance No. 19 of 1930 in respect of importations into the Cape Province covered by heads (a), (b) and (c) of paragraph 4.

"(b) That defendant is liable to pay licence duty in respect of importations into the Cape Province covered by heads (d), (e), (f), (g), (h) and (i) of paragraph 4, subject to a refund of the licence duty paid in respect of such importations in terms of sec. 7 of the First Schedule to Ordinance 19 of 1930 (as amended) under the heading 'Importer'.

"(c) That defendant is liable to pay licence duty in respect of importations into the Cape Province covered by heads (l) and (m), except where such importations were for the purpose of heads (j) and (k) subject to a refund of the licence duty paid in terms of sec. 7 of the First Schedule.

"(d) That defendant is liable to pay the costs of this action.

"Defendant contends:-

"(a) That defendant is not liable to pay the said sum of £310 5s or any other sum, on the ground that the imposing of an importer's licence in terms of the Ordinances and regulations aforesaid is ultra vires the Provincial Council, and the said Ordinances and regulations, so far as they refer to an importer's licence, are null and void in that: (i) the said Ordinances and regulations imposed indirect taxation, contrary to the terms of sec. 85 of the Act of Union; (ii) the said Ordinances and regulations impose taxation and/or payment subject to a refund in whole or in part in respect of the importation of goods other than goods for sale within the Province, contrary to the provisions of sec. 11 and the First Schedule of Act 10 of 1913, as amended by sec. 9 of Act 46 of 1925 and sec. 3 of Act 50 of 1935.

"(b) In the alternative that no tax can be levied, or payment

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required in respect of licences for importation except in regard to goods imported for sale as specified in paragraph 4 (a) hereof.

"(c) That plaintiff is liable to pay the costs of this action."

After this special case was drawn up the Cape Provincial Council passed the Licences Consolidation Amendment Ordinance, 1937 (No. 3 of 1937), which was promulgated before 4th March, 1937, the date of hearing of the special case. Sec. 3 of that Ordinance provides that the Ordinance shall be deemed to have come into operation on the 1st January, 1936. It therefore applied to the subject matter of the special case.

At the hearing of the special case on 4th March, 1937, counsel for plaintiff applied for leave to amend the special case by substituting 11 for 7 in plaintiff's contentions (b) and (c) (sec. 11 of the First Schedule, as amended by Ordinance 3 of 1937, is the section corresponding with the previous sec. 7 of the Schedule), Counsel for defendant opposed the amendment on the ground that Ordinance 3 of 1937 was promulgated on 12th February, 1937, the special case having been filed on 9th February, 1937, and that plaintiff could not rely on Ordinance 3 of 1937; and that in any event if leave to amend he granted it should be subject to defendant's right to claim the costs of the action if defendant failed on the special case, as amended, but would have succeeded on the special case as originally framed. The court below granted leave to amend, such amendment to be without prejudice to defendant's contention as to costs.

The judgment of the court below (prepared by VAN ZYL, J.P., in which JONES and CENTLIVRES, JJ., concurred) decided the contentions raised in the special case as follows: (1) Defendant was liable to pay importer's licence duty in respect of importations covered by heads (a) and (d) of paragraph 4 of the special case subject to the right to claim a refund of the proportionate amount of the duty under sec. 11 of the heading "Importer" in the First Schedule to Ordinance 19 of 1930, as amended by Ordinance 3 of 1937; (2) defendant was not liable to pay importer's licence duty in respect of importations covered by heads (b), (c), (e), (f), (g), (h), (i), (j) and (k) of paragraph 4 of the special case because it was ultra vires of the Council to levy a duty under those heads. The Court found itself unable to make any order under the heading (l) of paragraph 4 because the test of liability to pay was what was

Curlewis, C.J.

the intention of the importer at the time of importation; if goods are imported with the intention of selling them in the Cape Province the liability to pay the duty arises, and it can make no difference where the goods are actually sold; if goods are imported for the purposes of manufacture or construction then no duty is payable. And for the same reason the court below made no order under the heading (m.). The court ordered defendant to pay the costs. Against this decision defendant (now appellant) noted an appeal to this Court, and the plaintiff (now respondent) noted a cross-appeal asking for a variation of the order of the court below so as to read that the Court doth answer the contentions raised in the special case in terms of the contentions of plaintiff.

Before us, counsel in support of the appeal maintained, firstly, that the importer's licence imposed by Ordinance 3 of 1937 indirect taxation and therefore in conflict with sec. 85 (1) of the South Africa Act, which required that taxation must be direct, and that the Financial Relations Act, 10 of 1913, as amended by subsequent Acts, did not repeal sec. 85 (1) but merely gave Provincial Councils certain sources for raising revenue and did not alter the type of taxation: it must still be direct. Counsel adopted the definition of indirect taxation laid down by this Court...