Commissioners of Customs and Excise v Viva Gas Appliances Ltd

JurisdictionEngland & Wales
JudgeLord Diplock,Lord Fraser of Tullybelton,Lord Scarman,Lord Bridge of Harwich
Judgment Date24 November 1983
Judgment citation (vLex)[1983] UKHL J1124-1
Date24 November 1983
CourtHouse of Lords

[1983] UKHL J1124-1

House of Lords

Lord Diplock

Lord Fraser of Tullybelton

Lord Scarman

Lord Bridge of Harwich

Commissioners of Customs and Excise
(Respondents)
and
Viva Gas Appliances Limited
(Appellants)
Lord Diplock

My Lords,

1

This appeal brought by leave of this House provides the second occasion within two years on which your Lordships have had to consider the meaning of some ordinary English words used in schedule 4 of the Finance Act 1972 to describe services, the supply of which is zero rated under section 12 of that Act.

2

The words in question are those which I have italicised in the description of item 2 in Group 8 in the schedule — a Group which hears the heading "Construction of Buildings etc." Item 2 reads:

"The supply, in the course of the construction, alteration or demolition of any building or of any civil engineering work, of any services other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity."

3

In A.C.T. Construction v. Customs and Excise [1981] 1 W.L.R. 1542, Lord Roskill, with whose speech the other four members of the Appellate Committee expressed their complete agreement, approved the interpretation which had been put upon the words by Neill J. in the following passage in his judgment in Customs and Excise v. Morrison, Dunbar Ltd. [1979] S.T.C. 406:

"In dealing with a case to which item 2 of Group 8 is said to apply, I consider that one should first look to see whether the supply of the services in question is a supply in the course of the construction, alteration or demolition of a building. Each of these words is important and should be given its proper weight. The word 'alteration', it is to be noted, is found between 'construction' and 'demolition' and it follows, in my view, that the alteration to which item 2 applies is an alteration of the building and therefore one which involves some structural alteration …"

4

The A.C.T. Construction case involved also a question whether the work with which that case was dealing was a "work of repair or maintenance" and so excluded from Item 2 of Group 8 by Note (2)(a) even if it would otherwise have fallen within it; but that is not a matter that arises in the instant case.

5

The work undertaken by the appellant company in the instant case which it claims is entitled to be zero rated, consisted of the installation of gas fires in substitution for coal-burning fireplaces in old houses.

6

The following is a description by the Value Added Tax Tribunal of the general nature of the work involved in the provision of the services with which this appeal is concerned, together with that Tribunal's decision as to whether the work fell within Group 8, item 2:

"The works fall into a number of categories. First, there were cases in which a gas appliance was fitted to a flue which already existed and which had either been used or was designed to be used for the consumption of solid fuel. In such cases it would be necessary to break out the fireclay fireback, which had been built into the fireplace in such a way as to become an integral part of it and had no possibility of being removed otherwise than by its total demolition…. Clearly some degree of structural work or demolition was involved…. We consider that the degree of alteration was sufficient … to be regarded as an alteration to the building which was the house.

The second group of operations was the fixing of a fire in front of such an opening. This involved the connecting of the fire to the end of a pipe outlet newly connected to the meter or pre-existing. Behind the fire was a plate held to the wall by adhesive tape or alternatively there might be a fire surround in which the necessary opening had been cut, and into either of which the spigot of the fire flue was inserted. Such a fire surround would be held to the wall by up to six fixing plates. We do not consider that either of these operations of itself involved an adequate degree of alteration to a building to satisfy the test, but we do consider that it was nevertheless inseparable from the operation described in the preceding paragraph, in cases to which that paragraph applied.

Thirdly, in some of these installations gas supplies had to be brought by running pipes through walls and under floors from the position of the meter.

The length of the pipe run could not be precisely established from any documentation, but we hold that provided it was substantial in length and not merely minimal extension of an existing supply, it would satisfy the criteria."

7

The tribunal's decision, from which these passages are quoted was delivered shortly before, and thus without the benefit of, the judgment of this House in the A.C.T.Construction case.

8

The Commissioners of Customs and Excise appealed to the High Court from this decision under section 13 of the Tribunals and Inquiries Act 1971 and Order 55 of the Rules of the Supreme Court. Such an appeal lies only upon a point of law and Order 55(2) requires the grounds of appeal to be stated in the originating motion by which the appeal is brought.

9

In the instant case the identification of the error of law alleged to have been made by the tribunal could hardly have been expressed in terms more Delphic than those appearing in the originating summons. It said:

"The Tribunal erred in law in holding

1. That the works undertaken in the course of the installation of the gas fires amounted to a supply of services in the course of an alteration to [sic] the buildings into which the said fires had been installed.

2. That the said supplies were chargeable to tax at the zero rate."

10

This left to counsel for the Commissioners untrammelled scope to argue in favour of whatever glosses he thought fit to place upon the statutory words that fall to be construed. It would appear from the judgment of Forbes J., by whom the appeal was heard in the High Court, that the preferred glosses, all three of which were cumulative were: that the alteration of the structure or fabric of the building must (1) be...

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