Arderne Scott Thesen Ltd v Cape Provincial Administration

• Jurisdiction: South Africa
• Citation: 1937 AD 429

Arderne Scott Thesen Ltd Appellants v Cape Provincial Administration Respondent
1937 AD 429

1937 AD p429

Citation	1937 AD 429
Court	Appellate Division
Judge	Curlewis CJ, Stratford JA, Beyers JA, De Wet JA and Watermeyer AJA
Heard	September 1, 1937; September 2, 1937
Judgment	September 21, 1937

Flynote : Sleutelwoorde

Provincial Council — Powers — Importer's licence — Indirect taxation — Importation for sale within the Province — Goods imported for sale in, converted or manufactured form — Ordinance partly invalid — Whether whole Ordinance invalid — Ordinance 3 of 1937 (Cape) — Act 10 of 1913, as amended.

Headnote : Kopnota

A Provincial Division having held that Ordinance 19 of 1930 (Cape) as amended by Ordinance 3 of 1937 was intra vires in so far as it imposed an importer's licence in respect of goods imported for sale within the Cape Province, but ultra vires in so far as it included within the licence goods imported for purposes other than for sale within the Province.

Held, on appeal, that it was competent for the Provincial Council under Act 10 of 1913 as amended to impose an importer's licence upon goods imported for sale within the Province even though such licence was on a graduated scale and no maximum amount was fixed.

Held, further, that the Ordinance in so far as it defined the expression "importation for sale" and "imports for sale" in such wide words as to include the sale of imported goods not only in the form in which they are imported but also with the addition or combination of other substances or materials in a manufactured or converted form was ultra vires the Provincial Council.

Held, further (STRATFORD, J.A., and WATERMEYER, A.J.A., dissenting), that the fact that portions of the Ordinance were ultra vires did not invalidate the whole Ordinance.

The decision of the Cape Provincial Division in Arderne, Scott, Thesen Ltd. v Cape Provincial Administration, confirmed.

1937 AD p430

Case Information

Appeal from a decision of the Cape Provincial Division (VAN ZYL, J.P., JONES, J., and CENTLIVRES, J.).

The facts appear from the judgment of CURLEWIS, C.J.

H. E. Hockly, for the appellants: The importer's licence imposed by Ordinance 3 of 1937 is indirect taxation, as it contains the following features: (1) The Legislature's intention that the tax should be passed on to the consumer; (2) the tax is bound up with the question of price to be paid by the consumer; (3) the fact that there is no limit to the amount of the tax and that it varies directly according to the quantity of goods imported; (4) the tax is usually assessed at the time of import and not after goods have been disposed of to consumers; (5) the best examples of indirect taxation are Customs and Excise and this licence resembles a Customs duty. See de Waal v North Bay Canning Co. Ltd. (1921 AD 521 at pp. 524-6); Clarke & Co. v de Waal N.O. (1922 AD 264 at pp. 272, 274); Natal Provincial Administration v Cartledge (1925 AD 62 at p. 65); C.I.R. v Royal Exchange Assurance Co. (1925 AD 222); Ingle v Cape Provincial Administration (1926 AD 365). Taxation on a sliding scale up to a maximum is direct taxation, as all the features of indirect taxation are absent. See Clarke & Co. v de Waal N.O. (supra at p. 274).

The so-called importer's licence is not a licence. A licence fee is the amount to be paid to obtain permission to do something. In the present case the charge is merely a duty on what has been imported. See McLoughlin v Turner (1921, A.D at pp. 541, 547).

In view of the provisions of sec. 85 (i) of the South Africa Act and of the fact that the licences referred to in the Schedule to Act 10 of 1913 are all licences proper, i.e., direct taxes, it must be presumed that, when the Legislature used the word "licence" in Act 46 of 1925, the enabling Act, it intended to exclude indirect taxation.

To interpret a statute it may be helpful to look at the state of the law at the time of its enactment. See Pretorius v Barkly East D.C. (1914 AD 407) and Middelburg Municipality v Gertzen (1914 AD 544). Therefore see Act 38 of 1887 (C.), sec. 3, Schedule II - licence £12; Act 39 of 1908 (C.), sec 1 - sliding scale with maximum £100; Act 43 of 1898 (N.) - no importer's licence; Ordinance 10 of 1903 (O.) - no importer's licence; Act 15 of 1909 (T.) - no importer's licence. All these Statutes deal with proper licences.

1937 AD p431

All the licences in the Schedule to Act 32 of 1926 are proper licences. The general dealer's licence is on a sliding scale up to £100 and no importer's licence is mentioned.

Sec. 11 (2) of Act 10 of 1913, as substituted by sec. 9 of Act 46 of 1925, only deals with sources of tax and not the nature as dealt with in sec. 85 (i) of the South Africa Act.

Alternatively, if the transferred sources are additional to the general right of direct taxation under sec. 85 (i), such added sources must be direct so far as they are licences.

As to implied repeal of sec. 85 (i), see Chotabhai v Union Government and Another (1911, A.D at p. 23); du Plessis v Union Government (1916, A.D at p. 70); and New Modderfontein G.M. Co. v Cape Provincial Administration (1919, A.D at p. 400).

The mere abolition of the maximum of £310 for importer's licence in sec. 3 (1) of Act 50 of 1935 is not sufficient justification for saying that thereby Provincial Councils could alter the type of taxation so as to include indirect taxation; sec. 85 (i) of the South Africa Act still stands unrepealed. The new Act and Schedule defined the only sources but did not alter the restriction as to the type. Sec. 85 is mentioned but left unrepealed.

An importer's licence must still be a licence proper; i.e., for a definite amount or up to a definite maximum. That was the position until the passing of the Ordinance of 1936 and the Ordinance of 1937.

Provisions relating to importer's licence in Ordinance 3 of 1937 are invalid for the year 1936 because during 1936 there existed Ordinance 19 of 1930, as amended by Ordinance 19 of 1936, dealing with the subject.

Though Provincial Councils may, in certain circumstances, pass Ordinances with retrospective effect, Abraham v Durban Corporation (1927, A.D at p. 447), relied on by the court below, is not in point here.

Alternatively, the Ordinance is invalid in that it imposes the licence in respect of the importation of goods other than "goods for sale within the Province" as found by the court below.

The court was wrong in holding that the valid and invalid portions of the Ordinance are separable. See Attorney-General for Manitoba v Attorney-General for Canada. (1925, A. C at p. 568); Reloomal v Receiver of Revenue (Potchefstroom) (1927, A.D.

1937 AD p432

at p. 410); Lambat v Receiver of Revenue (1926, TPD at p. 526); and McLoughlin v Turner (supra at p. 552).

The portions are inseparable because every section is too wide.

Moreover, it is doubtful whether the Provincial Council would have passed an Ordinance in the truncated form. It would probably have raised the total amount of revenue required by increasing the amount charged or by raising revenue in some other manner. See C.I.R. v Galena Oil Co. Ltd (1931 T.P.D. 123 at p. 131).

Appellant should have been awarded costs in view of the amendment of the special case without consent, as appellant would have succeeded on Ordinance 19 of 1936, and the Ordinance of 1937 was clearly promulgated as the result of appellants' contentions in the special case as drafted.

T. E. Donges, for the respondent: The legislation contemplated by sec. 118 of the South Africa Act contained in Act 10 of 1913 and its amendments was not required to comply with sec. 85 (i). See the remarks of INNES, C.J., in Clarke v de Waal N.O. (supra at p. 271), which were necessary for the decision of that case. See, too, New Modderfontein G.M. Co. v Transvaal Administration (supra at p. 374).

Acts 5 of 1921 and 5 of 1922 limited the sphere of direct taxation conferred on Provinces by sec. 85 (i) of the South Africa Act.

Act 10 of 1913 both widened the powers given by sec. 85 (i) by including taxation which was not direct, i.e., auction dues, and narrowed them by excluding taxation which was direct, i.e., transfer duty. See Natal Provincial Administration v Cartledge (supra).

The proper construction of sec. 11 of Act 10 of 1913, as amended, is that Provincial Council powers of direct taxation under sec. 85 (i) are repealed or suspended and that from April 1st, 1925, a Provincial Council has no power to tax through any source other than those specified in the First Schedule. This is the construction favoured by Halsbury's Laws of England (Hailsham, vol. 11, pp. 116, 201). See also Street on Ultra Vires (pp. 482 and 486, note (p)); Kennedy and Schlosberg's Law and Custom of the South African Constitution (p. 281); C.I.R. v Galena Oil Co. (supra at p. 132); and Orkin and Others v Pretoria Municipality and Another (1927, TPD at pp. 545-6). The effect is that the vital distinction as regards Provincial taxing powers between direct and indirect taxation no longer exists.

1937 AD p433

Alternatively, even if sec. 85 (i) of the South Africa Act was not repealed or suspended by Act 46 of 1925, it does not matter whether the importer's licence is direct or indirect provided it falls under the First Schedule to Act 10 of 1913, as amended.

Any doubt as to whether the sources of revenue specified in the First Schedule to Act 10 of 1913, as amended, are to be read subject to sec. 85 (i) of the South Africa Act are set at rest by Act 50 of 1935. Parliament, by enabling Provincial Councils to levy an importer's licence without any limit, deliberately made the tax indirect. Sec. 3 of Act 50 of 1935 is repugnant to sec. 85 (i) of the South Africa Act. As to implied repeal see Chotabhai v Union Government (supra); du Plessis v Union Government (supra); and New Modderfontein G.M. Co. v Transvaal Administration (supra)...