Between: Russell (Inspector of Taxes) - Appellant
And: Scott - Respondent

Judges: Viscount Simon
Lord Porter
Lord Simonds
Lord 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 by:
Lord Oaksey

My Lords, I agree that the judgment of the Court of Appeal in Northern Ireland is right and should be affirmed. The question is whether the respondent in the way in which he dealt with a sand-pit on his farm was carrying on a concern of the like nature with the concerns referred to in r. 3 of No. III of sch. A. I agree with your Lordships that there was evidence upon which the commissioners could find that the respondent was carrying on a concern. The question remains whether it was a concern of a like nature to the other concerns mentioned in r. 3. On this question I agree with the observations of my noble friend, Lord Simons, on the maxim of income tax law that the subject is not taxed unless the words of the taxing statute unambiguously impose the tax upon him.

It has been argued by the Attorney-General for Northern Ireland that No. III of sch. A should be construed to include all concerns connected with land which are in their nature commercial, and which produce varying profits, that the characteristic suggested by the respondent's counsel, namely, extraction of part of the soil, is inconsistent with the inclusion of salt springs and alum mines in r. 3 and further is unconnected with any reason for treating such concerns differently from any other concern connected with the land. It was also suggested that No. I dealt with the agricultural uses of land and No. III with all other uses. I am unable to accept these arguments. I do not think the interpretation of such provisions as sch. A, Nos. I and III can be approached in this general way. It may be that it would have been perfectly reasonable to tax every profit arising from land, other than agricultural profit, in a different way from agricultural profit, but it is necessary to consider the words used and the frame of the schedule.

Schedule A provides by No. I:

"General Rule for estimating the annual value of Lands, Tenements, Hereditaments or Heritages.

"In the case of all lands, tenements, hereditaments or heritages capable of actual occupation, of whatever nature, and for whatever purpose occupied or enjoyed, and of whatever value (except the properties mentioned in No. II and No. III of this schedule), the annual value shall be understood to be:

(1.)

The amount of the rent by the year at which they are let, if they are let at a rackrent and the amount of that rent has been fixed by agreement within the period of seven years preceding April 5 next before the time of making the assessment; or

(2.)

If they are not let at a rackrent so fixed, then the rackrent at which they are worth to be let by the year."

Number III is one of the exceptions and everything not dealt with in the exceptions must fall within the general provisions of No. I. No. I is not confined to agricultural uses of land, but refers to all uses except those in Nos. II and III. Number III, r. 1, I think, deals with quarries and r. 2 with mines exhaustively with the single exception of alum mines, and it is conceded that sand-pits are not included in rr. 1 or 2. Now, the digging of sand, gravel, clay or peat are and have been from time immemorial ordinary and well-known uses of land, and it is, in my view, impossible to construe r. 3, which deals expressly with a variety of subjects, none of which bears anything like such a close resemblance to digging for sand as do the subjects dealt with expressly in r. 1, as including sand-pits merely because alum mines are included in r. 3.

The reason why such subjects as sand-pits were omitted from the list in No. III (though it is not for the courts to find a reason) was, I imagine, because the concern of using a sand-pit or the like was considered to be an ordinary use of land. In any event sand-pits are not expressly referred to in No. III and to bring them in under such words as "other concerns of the like nature" in r. 3 appears to me to be an unjustifiable extension of general words in an exception. For my own part, I am not at present prepared to hold that it is necessary to find a category to which all the subjects enumerated in r. 3 belong, and that concerns of a like nature must fall within that category, but in my opinion digging sand is not of a like nature to any of the enumerated subjects, having regard to the context of rr. 1 and 2 in which r. 3 occurs.

Apart from these reasons of construction, I think it is not unimportant that as long ago as 1858 in the case of Edmonds v. Eastwood ^[F35] Pollock C.B. and Martin and Watson BB. all expressed the view that No. III did not include digging for clay. This case does not appear to have been cited to the Court of Appeal in England, in the case of Mosley v. George Wimpey & Co., Ld., ^[F36] where it was held that the extraction of gravel for commercial purposes was a concern within No. III. For the reasons which I have given, that case must, in my opinion, be overruled. I cannot agree with the view of Scott L.J. that the widest possible interpretation ought to be given to the exceptions contained in No. III, nor can I agree with du Parcq L.J., as he then was, in holding that digging of gravel is a concern of a like nature with alum mines.

Appeal dismissed.

Solicitor for appellant: Solicitor of Inland Revenue.

Solicitors for respondent: Rising & Ravenscroft for William J. G. Seeds, Limavady, Northern Ireland.