Commissioners of Customs and Excise v Ferrero UK Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 06 May 1997 |
| Date | 06 May 1997 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Lord Woolf MR, Hutchison and Mummery L JJ.
David Ewart (instructed by Taylor Joynson Garrett) for the taxpayer.
Melanie Hall (instructed by the Solicitor for Customs and Excise) for the Crown.
The following cases were referred to in the judgment:
C & E Commrs v Ferrero UK Ltd VAT[1996] BVC 282
Ferrero UK Ltd VAT(LON/94/1149) No. 13,493, [1996] BVC 2462
Value added tax - Zero-rating - Food - Test for deciding whether product was a biscuit or confectionery - Application to amend grounds of appeal - Whether Customs could put forward a new point on appeal to the court - If not, whether court had jurisdiction to remit case to a different VAT tribunal for rehearing -Value Added Tax Act 1983, Sch. 5, Grp. 1, general item 1, excepted item 2 (Value Added Tax Act 1994 schedule 8 group 1Value Added Tax Act 1994, Sch. 8 Grp. 1, general item 1,, excepted item 2); Rules of the Supreme Court, O. 55, r. 7(5).
This was an appeal by the taxpayer and a cross-appeal by Customs against a decision of Potts J ([1996] BVC 282) on a preliminary issue.
The judge had refused an application by Customs to amend their notice of appeal against the decision of the VAT and duties tribunal ((LON/94/1149) No. 13,493; [1996] BVC 2462), introducing a new argument not advanced before the tribunal. Without going into the merits of the case, the judge purported to remit the matter to a differently constituted tribunal pursuant to the Rules of the Supreme Court, O. 55, r. 7(5) which provided that "the court may remit the matter with the opinion of the court for rehearing and determination". The taxpayer appealed against the judge's order remitting the case to the tribunal under RSC, O. 55, r. 5(7) and Customs cross-appealed against his refusal to amend the notice of appeal.
The appeal arose in relation to the proposed launch of products advertised as "a little biscuit snack" or a "specialty biscuit". Customs claimed the products were "confectionery" within excepted item 2 to general item 1 in Grp. 1 of Sch. 5 to the Value Added Tax Act 1983 and accordingly they were not zero-rated.
The tribunal decided by a majority, the chairman disagreeing with the two lay members, that the products were zero-rated biscuits rather than confectionery which was excepted from general item 1 by excepted item 2. The tribunal had stated that the two lay members thought the products were "more akin to biscuits" but the chairman thought they were not biscuits.
Customs wished to advance the argument that, in saying that the items were "akin to biscuits" the tribunal had applied the wrong test. What they had to decide was not whether the products were "akin to biscuits" but whether they were biscuits.
Held, allowing the taxpayer's appeal and dismissing Customs' cross-appeal:
1. The judge erred in ordering the case to be remitted to a different tribunal under RSC, O. 55, r. 7(5). He could not remit the whole matter for "rehearing and determination" without quashing the original decision on the merits. Otherwise there might be conflicting decisions. RSC, O. 55, r.7(5) was not intended to deal with interlocutory problems. That did not mean that the court might not seek assistance and remit to the tribunal of its inherent jurisdiction if necessary. But here it was not necessary to remit. The judge was in a position to deal with the real issues.
2. The tribunal had stated correctly that the question was whether the products concerned were biscuits. But later they said that the principles were to be applied "in the light of the authorities". The word "biscuit" should be given its ordinary meaning as perceived by the ordinary person. If the item in question had the characteristics of two types of product, if for example it could be described as a cake and a biscuit, in order to decide in which category it belonged one might ask to which it was "more akin". The tribunal had applied the right test and decided as a question of fact and degree that these products were biscuits.
As a result of the many cases cited to the tribunal, their decision was far more elaborate than was necessary. Tribunals should not be misled by authorities of fact into inappropriately raising questions of principle. No less than eight cases were cited on their own facts. They were not to be regarded as principles of law when the question was one of fact and degree.
Lord Woolf MR: This an appeal from a decision of Potts J ([1996] BVC 282) when he remitted an appeal which was made to him from a VAT tribunal ((LON/94/1149) No. 13,493; [1996] BVC 2462) for reconsideration and determination. At the outset of the appeal, I would say that we are particularly grateful for the assistance of counsel in clarifying the issues raised both before the tribunal and before the judge when he heard the matter on 3 May last.
The appeal to Potts J concerned a point of law under s. 11 of theTribunals and Inquiries Act 1992. The appeal was from a majority decision of the tribunal, the case being one where the lay members of the tribunal took a different view from the chairman as to what should be the outcome. The majority held that the decision of Customs was incorrect and that the products should be treated as zero-rated for the purpose of the VAT legislation. The relevant VAT legislation is contained in the Value Added Tax Act 1983. The 1983 Act has now been replaced...
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