Russell (Inspector of Taxes) v Scott
[1948] A.C. 422(Judgment by: Lord Simonds)
Between: Russell (Inspector of Taxes) - Appellant
And: Scott - Respondent
Judges:
Viscount Simon
Lord Porter
Lord SimondsLord Normand
Lord Oaksey
Subject References:
REVENUE
INCOME TAX
ASSESSMENT
Sand-pit situated on farm
Sales of sand
'Concerns of the like nature'
Legislative References:
Income Tax Act 1918 (8 & 9 Geo. 5, c. 40) - Rules Applicable to sch. A., No. III, r. 3
Judgment date: 13 May 1948
Judgment by:
Lord Simonds
My Lords, the relevant facts of this case have been so fully stated that I need not repeat them nor should I think it necessary to add anything upon the general questions of law that arise but for the importance of the case and the fact that it is necessary to consider and in effect overrule the decision of the Court of Appeal in England in Mosley v. George Wimpey & Co., Ld. [F20]
The two questions of law, which are in truth two branches of one question, are
- (1.)
- whether that which the respondent did in relation to a sand-pit forming part of his farm at Glebe in the county of Londonderry was the carrying on of a "concern" and
- (2.)
- if so, whether it was a "concern of the like nature having profits from or arising out of any lands" within the meaning of r. 3 of No. III of sch. A to the Income Tax Act, 1918.
On the first question I will add nothing to what has been said by my noble and learned friend on the woolsack. It is on the second question that I wish to make some observations.
My Lords, there is a maxim of income tax law which, though it may sometimes be overstressed, yet ought not to be forgotten. It is that the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him. It is necessary that this maxim should on occasion be reasserted and this is such an occasion. Here it is sought to tax the owner and occupier of land in respect of the profits made by him from the sale of sand on the footing that in effecting those sales he is carrying on a concern which is "of the like nature" to "ironworks, gasworks, salt springs or works, alum mines or works, waterworks, streams of water, canals, inland navigations, docks, drains or levels, fishings, rights of markets and fairs, tolls, railways and other ways, bridges, ferries."
I need go no further into the history of this catalogue than to say that with some additions it goes back for nearly one hundred and fifty years. During the whole of that time there can have been no more familiar feature of the landscape than pits of sand or gravel or clay and I cannot doubt but that during that time and before it the owners of such pits have been accustomed in greater or less degree to exploit them not only for their own use but by profitable sales. Yet it is suggested that the legislature, while expressly including in the catalogue such comparatively rare concerns as alum mines or works and salt springs or works, yet left to the precarious embrace of the expression "other concerns of the like nature" the commonplace operations which it is now sought to tax. Nor does the matter rest there. For the catalogue which I have recited follows immediately after r. 1, which deals with quarries of stone, slate, limestone, or chalk, and r. 2, which deals with mines of coal, tin, lead, copper, mundic, iron, and other mines.
Here, surely, would be the appropriate setting in which, had the legislature so intended, pits of sand or gravel or clay should eo nomine have been placed or included by words of general description. I cannot bring myself to suppose that the legislature either overlooked what almost obtrudes itself on the eye of any observer, or, observing it, deliberately refrained either from mentioning it or from putting it in its proper place. I am brought back, then, to the maxim that I have mentioned. For it appears to me that here is a case in which the subject is entitled to say that the words of the section under which it is sought to tax him do not do so with the clarity which the subject matter demands.
What I have said applies equally to gravel pits and to sand-pits and it follows that in my view Mosley's case [F21] was wrongly decided. The argument of the learned Attorney-General was properly founded on that decision. I must, therefore, observe on it that, while Scott L.J. rested his judgment on the view [F22] that "the generic words should .... be interpreted widely, and as disclosing an express intention of Parliament to sweep into the net every concern of the general character I have endeavoured to describe above," du Parcq L.J. [F23] disclaimed this view and found in a sand-pit a concern of a like nature to two of the particular concerns included in the catalogue, viz.: salt works and alum mines. Your Lordships have not the advantage of knowing the opinion of Uthwatt J. on this point.
My Lords, I agree with du Parcq L.J. in thinking that the general proposition of Scott L.J. cannot be sustained. In the first place, I think, with great respect, that he ignores that No. III in sch. A comprises exceptions to the general rule which is to be found in No. I. What is not covered by the language of No. III falls within No. I if it is within sch. A at all and does not fall within the other exceptions, and there is no need to give to No. III a wider meaning than, construed as a taxing statute, it strictly requires. Secondly, I cannot accept what I understand to be the view of Scott L.J. as to the generic conception of the specified concerns, viz., [F24] that they have the
"common feature of a variable economic yield which makes the rackrent an untrue or impracticable measure of annual value, and .... their dissimilarity to .... the 'normal' use of land."
It is not, I think, open to the House after the decision in Fry v. Salisbury House Estate, Ld., [F25] to say that if a "concern" satisfies these two conditions it must necessarily fall within r. 3 of No. III. Nor, apart from that decision, should I be prepared to accept such a proposition. For, if these two conditions constituted the difference between the cases falling within No. I and No. III, I see no necessity for segregating the items in r. 1 from those in r. 3 nor indeed for any catalogue at all.
Nor, my Lords, can I accept the view expressed by du Parcq L.J. that a gravel pit is a concern of like nature to alum mines or salt springs and therefore within r. 3. I would doubt whether, where a list is followed by such general words as "concerns of like nature," it is proper to regard as covered by those words concerns which have a likeness to one or two of the items but do not exhibit a characteristic common to them all. But, however this may be, I cannot find a sufficient likeness to the items chosen by du Parcq L.J. to justify the inclusion of concerns which, if they had been intended to be included, would surely themselves have been selected as examples. In this connexion I refer to my earlier observations and reinforce them by reference to the case of Edmonds v. Eastwood, [F26] which appears not to have been called to the attention of the Court of Appeal in Mosley's case. [F27] In that case, which was decided ninety years ago and has never, so far as I am aware, been criticized, Pollock C.B. used these words: [F28]
"I entertain considerable doubt - indeed more than a doubt - whether brickfields are to be treated as coal mines or salt works or any of those matters specifically mentioned in the Rules to Schedule A No. III .... With the public notoriety that property of that description exists to a great extent, especially in the neighbourhood of London, it seems almost impossible, if it was intended to include it, that it should not have been inserted by name in the same category as coal mines or salt works"
and again:
"My opinion is that the case of a brickfield was not intended to be included within No. III."
In this view Watson B. expressly concurred. [F29] Martin B. observed [F30] that he concurred with the Lord Chief Baron that there was considerable doubt whether this was so - i.e., whether a brickfield fell within r. 3 of No. III: he appears to have underestimated the force of the Lord Chief Baron's conviction. Channell B. [F31] doubted whether the case fell within No. I or No. III.
My Lords, I do not think that your Lordships would be justified in disregarding these expressions which have gone so long unchallenged upon the meaning and effect of a taxing statute, even if they did not wholly commend themselves. But, for myself, there is in them not only the force of almost venerable authority but also compelling reason. I would dismiss this appeal accordingly.
I must finally say a few words about the so-called cemetery cases which begin with the Edinburgh Southern Cemetery Co. v. Kinmont (Surveyor of Taxes). [F32] Your Lordships are not, I think, called on to review the correctness of these decisions. In the cited case Lord President Inglis, without giving any further reason, said [F33] that it appeared to him that the cemetery company there under consideration fell "very fairly within the words 'other concerns of the like nature,' as occurring in that rule."
Lord Shand said [F34] that the true solution of the question was to be found in the fact that "all of these different concerns relate to companies which, having purchased or acquired land, remain in the occupation and use of that land themselves, and are using it for the purpose of some trade or business whereby they acquire profits."
I do not think that the learned judge is here laying any stress on companies as distinguished from natural persons, but I would respectfully suggest that, if he meant that all companies or persons, which satisfy the test that he indicates, at once come within r. 3 of No. III, the proposition is far too wide. It may well be that, if the matter came to be argued before your Lordships, there would be found some common characteristic which would justify the inclusion of cemetery companies in the rule. Remembering the high authority of Lord President Inglis, I am not disposed without argument to decide the contrary. But in this case I do not feel called upon either to attempt a definition of the class which r. 3 embraces or to do more than reject the contention of the Inland Revenue that they have established that a sand-pit is a concern "of like nature" to the concerns enumerated in r. 3 of No. III or to any one or more of them.