Commissioners of Customs and Excise v East Midlands Aggregates Ltd
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Rimer,MR JUSTICE RIMER |
| Judgment Date | 23 April 2004 |
| Neutral Citation | [2004] EWHC 856 (Ch) |
| Court | Chancery Division |
| Docket Number | CH/2003/APP/0830 |
| Date | 23 April 2004 |
[2004] EWHC 856 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Honourable Mr Justice Rimer
CH/2003/APP/0830
In the Matter of an appeal by The Commissioners of Customs and Excise from a decision of a VAT & Duties Tribunal
Mr Craig Sephton QC (instructed by the Solicitor's Office of The Commissioners of Customs and Excise) appeared for the Appellant
Mr Craig Howell Williams (instructed by Hewitsons) appeared for the Respondent
I direct pursuant to CPR PD 39, para. 6, that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is an appeal by The Commissioners of Customs & Excise ("the Commissioners") against the decision dated 24 September 2003 of Mr Colin Bishopp, a Chairman of a VAT & Duties Tribunal ("the Tribunal"). The respondent is East Midlands Aggregates Limited ("EMAL"). Mr Craig Sephton QC appeared for the Commissioners and Mr Craig Howell Williams for EMAL.
The matter before the Tribunal was an appeal by EMAL against the decision of the Commissioners that it was liable to be registered for the purposes of "aggregates levy" pursuant to section 24(2) of, and paragraph 2(1) of Schedule 4 to, the Finance Act 2001. EMAL was substantially successful in its appeal, as I explain below. The Commissioners, by the appeal to this court, challenge the correctness of part of the Chairman's decision.
The facts
I take these from the Chairman's decision. He recorded that there was no significant dispute about them.
Lockwood Holdings Limited ("LHL") owns a site at Sawmills, Belper, Derbyshire on the steeply sloping southern bank ("the slope") of the River Amber. It carries on from there the business of food manufacture, storage and distribution. In about 1993, LHL constructed a warehouse near the western end of the site. In order to create a level site on which to do so, it had to cut into the slope.
LHL obtained planning permission in May 2002 to erect a second warehouse adjacent, and internally connected, to the southern side of the existing warehouse. The permission also authorised the construction of a lorry park on the southern side of the proposed new warehouse, which the Chairman described as being more accurately regarded as a lorry loading and manoeuvring area. He found that LHL's intention was that "the means of access to the existing warehouse, at its eastern or front end, should be largely abandoned and replaced by the newly constructed area, from which access to both the existing and new warehouse buildings would be available."
The existing warehouse is about 130 metres long, 32 metres wide and 10 metres high. The new warehouse will be slightly shorter, but with a similar height and width. In order to provide a level site for the new warehouse and lorry park, and at the same elevation as the existing warehouse, it is necessary to cut further into the slope, augmented as it has been by the deposit of the spoil excavated when the existing warehouse was constructed. The necessary work involves the extraction of about 425,000 tonnes of material. Condition 4 of the planning permission requires that "All materials associated with the proposed excavation shall be removed from the site or adjoining land before the building is occupied." The spoil to be excavated and removed consists of poor quality rock mixed with soil, including the natural overburden.
EMAL, the appellant before the Tribunal, entered into a contract with LHL to remove the spoil, although the Chairman was not provided with a copy of the contract, and made no findings as to its terms. EMAL made a start on the work, but suspended it when the present dispute with the Commissioners arose. The dispute is as to whether aggregates levy will be payable by EMAL in respect of the removed spoil. The Chairman was told that the project might become economically unsustainable if the levy is payable.
Aggregates Levy
An "aggregates levy" was introduced by Part 2 of the Finance Act 2001 ("the Act"), as amended by the Finance Act 2002. The relevant provisions of the Act came into force on 1 April 2002. Sections 16, 17, 19 and 24, as amended, provide, so far as material:
"16. Charge to aggregates levy
(1) A levy, to be known as aggregates levy, shall be charged in accordance with this Part on aggregate subjected to commercial exploitation.
(2) The charge to the levy shall arise whenever a quantity of taxable aggregate is subjected, on or after the commencement date, to commercial exploitation in the United Kingdom.
(3) The person charged with the levy arising on any occasion on a quantity of aggregate subjected to commercial exploitation shall be the person responsible for its being so subjected on that occasion.
(4) The levy shall be charged at the rate of £1.60 per tonne of aggregate subjected to commercial exploitation; and the amount of levy charged on a part of a tonne of aggregate shall be the proportionately reduced amount.
(5) The levy shall be under the care and management of the Commissioners of Customs and Excise …
Meanings of 'aggregate' and 'taxable aggregate'
(1) In this Part 'aggregate' means (subject to section 18 below) any rock, gravel or sand, together with whatever substances are for the time being incorporated in the rock, gravel or sand or naturally occur mixed with it.
(2) For the purposes of this Part any quantity of aggregate is, in relation to any occasion on which it is subjected to commercial exploitation, a quantity of taxable aggregate except to the extent that-
(a) it is exempt under this section; …
(3) For the purposes of this Part aggregate is exempt under this section if—
(a) [repealed]
(b) it consists wholly of aggregate won by being removed from the ground on the site of any building or proposed building in the course of excavations lawfully carried out-
(i) in connection with the modification or erection of the building; and
(ii) exclusively for the purpose of laying foundations or of laying any pipe or cable;
(c) it consists wholly of aggregate won—
(i) by being removed from the bed of any river, canal or watercourse (whether natural or artificial) or of any channel in or approach to any port or harbour (whether natural or artificial); and
(ii) in the course of the carrying out of any dredging undertaken exclusively for the purpose of creating, restoring, improving or maintaining that river, canal, watercourse, channel or approach;
(d) it consists wholly of aggregate won by being removed from the ground along the line or proposed line of any highway or proposed highway and in the course of excavations carried out-
(i) for the purpose of improving or maintaining the highway or of constructing the proposed highway; and
(ii) otherwise than wholly or mainly for the purpose of extracting that aggregate; or
(e) it consists wholly of the spoil, waste or other by-products resulting from the extraction or other separation from any quantity of aggregate of any china clay or ball clay.
(f) it consists wholly of the spoil from any process by which-
(i) coal, lignite, slate or shale; or
(ii) a substance listed in section 18(3) below,
has been separated from other rock after being extracted or won with that other rock.
…
Commercial exploitation
(1) For the purposes of this Part a quantity of aggregate is subjected to exploitation if, and only if-
(a) it is removed from a site falling within subsection (2) below; …
(2) The sites which, in relation to any quantity of aggregate, fall within this subsection are-
(a) the originating site of the aggregate; …
(3) For the purposes of this Part the exploitation to which a quantity of aggregate is subjected shall be taken to be commercial exploitation if, and only if-
(a) it is subjected to exploitation in the course of furtherance of a business carried on by the person, or one of the persons, responsible for subjecting it to exploitation. …
The register
(1) It shall be the duty of the Commissioners to establish and maintain a register of persons who are required to be registered for the purposes of aggregates levy.
(2) A person is required to be registered for the purposes of aggregates levy if he-
(a) carries out taxable activities, and
(b) is not exempted from registration by regulations under subsection (4) below.
(3) For the purposes of subsection (2) above a person carries out a taxable activity if a quantity of aggregate is subjected to commercial exploitation in the United Kingdom in circumstances in which he is responsible for its being so subjected. …"
The provisions of direct relevance to the issue before the Chairman are those in section 17(3)(b). The question for him was whether the aggregate to be removed by EMAL enjoyed exemption under that paragraph. I add that section 17(3)(f) was added by amendment. The Chairman expressed his view that, when it was so added, the apparent need to move the "or" from the end of paragraph (d) to the end of paragraph (e) was overlooked. I agree. The Chairman also expressed his view that each paragraph of section 17(3) is intended to deal with a "discrete, self-contained situation" and I agree with that too. Each paragraph provides a separate exemption.
More facts
On 16 August 2002, the Commissioners wrote a letter to EMAL headed "Aggregates Levy". They referred to a prior visit to the LHL site, where EMAL had started the excavation works. They expressed their opinion that EMAL's excavation business at the site amounted to the making of taxable supplies of aggregate such as to render EMAL liable to registration for aggregates levy under sections 16(3) and 24(3) of the Act. They said they...
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