Commissioners of Customs and Excise v British Railways Board
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUCKLEY,LORD JUSTICE ORR,LORD JUSTICE BROWNE |
| Judgment Date | 11 May 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J0511-3 |
| Date | 11 May 1976 |
| Court | Court of Appeal (Civil Division) |
[1976] EWCA Civ J0511-3
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Order of the Divisional Court.
Lord Justice Buckley,
Lord Justice Orr and
Lord Justice Browne
Mr R. E. AULD Q. C. and Mr P. GIBSON (instructed by Mr K. Krikorian, Solicitor, Customs and Excise) appeared on behalf of the Appellants.
Mr J. GARDINER (instructed by the Chief Solicitor, British Railways Board) appeared on behalf of the Respondents.
This is an appeal from a decision of the Divisional Court of the Queen's Bench of the 18th July, 1975, on an appeal to the Divisional Court from a decision of the Value Added Tax Tribunal tinder the Tribunals and Enquiries Act 1971 S. 13, which from there only lies an appeal upon questions of law. It raises the question about the position in relation to Value Added Tax of the Railways Board in respect of the pension funds that exist in the Railway undertaking.
The Railways Board is a body which was set up under the Transport Act 1962 as a corporation and in which there were vested certain of the assets, rights and liabilities of the former Transport Commission. The same Act established, also the London Transport Board, the British Transport Docks Board and the British Waterways Board. Other assets, rights and liabilities of the Commission were vested in thos boards.
The primary duty of the Railways Board is laid down by Section 3 (1) of that Act in these terms: "It shall be the duty of the Railways Board in the exercise of their powers under This Act to provide railway services for Great Britain and in connection with the provision of railway services to provide such other services and facilities as appear to the Board to be expedient and to have due regard as respects all those railway and other services and facilities, to efficiency, economy and safety of operation".
By the Act, as I have said, certain assets, rights and liabilities of the Commission were vested in the Board. By Section 14 (1) certain supplemental provisions were made as to the powers of the Board which confer upon the Board certain specific powers including in paragraph (1) ofsub-section 1 the power to do "all other things which in the opinion of the Board are necessary to facilitate the proper carrying on of their business".
Section 73 of the Act empowers the Board to pay pensions and enter into obligations under pension schemes to pay the employer's contributions and so forth. Section 74 confers upon the Minister the power to make Orders with respect of provision of pensions by the Board in respect of their employees, and for the establishment and administration of existing or future pension schemes and pension funds for any of those purposes. Under that power, the Minister made an order in 1970 called "The British Transport (Amalgamation of Railways Pensions Funds) (No. 1) Order", which is Document 15(b) of the documents before the Court. That "Order amalgamated the pension funds which had previously been administered at the time of the transfer from the Transport Commission to the Board by the Transport Commission, which had been inherited from the four independent railway companies that previously existed before the nationalisation of the Railways. The order amalgamated those funds.
First of all, I ought to refer to Article 2 of that Order, which provided that on the amalgamation date the four existing pension fluids should be amalgamated and become one pension fund, referred to as the "amalgamated fund"; and that the amalgamated fund should be vested in the Board but should be administered in four sections reflecting the pre-existing separate funds; and that after the amalgamation date the Board should, subject to the provisions of the Order, hold all the assets of the existing funds as assets of the amalgamated fund.
Article 5, permitted the Board to continue investment of the monies of the fund in deposits that the Board itself used in its railway undertaking, and Article 9 provided that the cost of the acquisition or disposal of investments of the amalgamated fund should he borne by the fund except insofar as the Board might decide to bear such costs, but all other costs, charges and expenses whatsoever incurred or in connection with the management of the amalgamated fund should be borne by the Board.
In due course, a trust deed was made on the 21st August, 1970, which is document 14(a), flagged "Appendix 'G'". By that deed, the Railways Board declared trusts of the monies so vested in them. Clause 6 of that trust deed provided: "The Board shall hold all monies and investments which may from time to time be in their hands or under their control in respect of the Fund upon trust to deal with the same for the absolute benefit of the Fund in accordance with the provisions of this Deed and of the Rules".
The detail operative trusts are to be found not in the deed itself but in the rules which are attached to it. She trust deed contained in Clause 11 provisions as to the costs of management and so forth corresponding to the provisions in that respect in the order. It is in these terms: "All costs charges and expenses whatsoever incurred in or about the management of the Fund shall be borne by the Board provided that the costs of acquisition and disposal of investments shall be borne by the Fund except to such extent (if any) as the Board shall determine".
The effect of that Order, which has statutory force, His that the Board is the sole trustee of the amalgamated fund. It is charged with the administration of that fund in accordancewith the rules and that it is obliged to pay out of its own moneys not forming part of the fund all the management expenses other than the costs and expenses actually attending charges of investment.
Value Added Tax was established by the Finance Act of 1972. Section 1 set up the tax. Section 2 prescribes the scope of the tax. I will read sub-sections 1 and 2, "Except as otherwise provided by this Part of this Act the tax shall be charged and payable as follows". That is sub-section 1. Sub-section 2: "Tax on the supply of goods or services shall be charged only where (a) the supply is a taxable supply; and (b) the goods or services are supplied by a taxable person in the course of a business carried on by him; and shall be payable by the person supplying the goods or services".
Sub-section 3 deals with imports, which we are not concerned with.
Sub-section 4...
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