Inland Revenue v Forth Conservancy Board
| Jurisdiction | Scotland |
| Judgment Date | 27 June 1930 |
| Date | 27 June 1930 |
| Docket Number | No. 110. |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
Revenue—Income tax—Income assessable—Dues levied under statute on shipping entering a river—Income Tax Act, 1918 (8 and 9 Geo. V. cap. 40), Sched. D., Case VI.
Schedule D of the Income Tax Act, 1918, provides for tax being charged under that Schedule in respect, inter alia, of profits arising from trade, and of profits not charged under Schedules A, B, C, or E, and not specially exempted from tax. The Schedule further provides that tax thereunder shall be charged under Case VI. thereof in respect of profits not falling under the preceding Cases and not charged under any other Schedule.
A conservancy board was established by statute to preserve and improve a river and firth, and to control the navigation therein. Its members were appointed or elected by local authorities, government departments, railway companies, and shipowners. It possessed wide powers to dredge, light, buoy, and otherwise improve the navigation of the river, and it was empowered to levy dues on vessels entering the river or firth. These dues constituted its sole revenues. It had already been held that the board was not assessable under Schedule A in respect of these dues.
Held that the board was assessable on the surplus revenue arising from these dues under Case VI. of Schedule D, in respect that such revenue constituted profits or gains, not charged under any other Schedule or Case, derived from its statutory power to charge dues in return for the public services which it provided.
Severn Fishery Board v. O'MayELR, [1919] 2 K. B. 484,commented on.
The Forth Conservancy Board, constituted by the Forth Conservancy Order Confirmation Act, 1921, appealed to the Commissioners for the General Purposes of the Income Tax Acts for the District of Stirling, against assessments to income tax for the five years 1921-1926, made upon it under Schedule D, Case VI., of the Income Tax Act, 1918,1 in respect of dues levied by it on shipping entering the River and Firth of Forth. The General Commissioners sustained the Board's appeal, and, at the request of the Commissioners
of Inland Revenue, stated a case for the opinion of the Court of Session as the Court of Exchequer in Scotland.
The case set forth that the following facts were admitted or proved:—"(1) Following upon negotiations initiated by the Board of Agriculture for Scotland with the local authorities interested in the development of the River and Firth of Forth, the Board was constituted under the Forth Conservancy Order, 1920, as confirmed by the Forth Conservancy Order Confirmation Act, 1921 (11 and 12 Geo. V. cap. v.). The Board exercises jurisdiction over that part of the River and Firth of Forth between Stirling and an imaginary line drawn across the Forth approximately a mile east of the Forth Bridge. (2) The objects of the Board are the preservation, maintenance, and improvement of the River and Firth of Forth. (3) Under section 8 of the Order, it is provided that the Board shall consist of thirty-one members, who are required to be appointed and elected as follows:—
| (a) | Appointed by Local Authorities | 13 |
| Appointed by Government Departments | 5 | |
| Appointed by Railway Companies | 4 | |
| (b) | Elected by Shipowners and persons paying dues to the Board | 9 |
| 31 |
(4) Under section 27 of the Order there was transferred to the Board the undertaking of the Commissioners of the Forth Navigation, which body had been previously constituted for the purpose of improving and regulating the navigation of the river from Alloa to Stirling, under the Forth Navigation Act of 1843 (6 and 7 Vict. cap. xlvii.). (5) With the exception of Stirling Harbour, which is practically derelict, the Board, up to 5th April 1926, did not own any heritable subjects other than a portion of foreshore which was purchased by the Board in 1925. The foreshore in question was acquired with the view to its possible reclamation at some future date. (6) Part IV. of the Order gives to the Board the powers necessary to carry out its obligations. These powers, as enacted in section 36, are as follows:—'Subject to the provisions of this Order the Board may from time to time do all or any of the things following (namely):—(a) Dredge cleanse and scour the river.' [Then followed a list of powers for the improvement of navigation and the regulation of traffic, contained in various sections of the Order.] (7) Part V. of the Order empowers the Board to levy dues, rates, and charges as specified in the Third Schedule in respect of vessels entering or using that part of the River and Firth of Forth which is within the Board's jurisdiction, and in respect of goods and passengers conveyed upon or shipped or unshipped in the river. Section 55 empowers the Board to recover rates for the use of any landing places, workshops, cranes, power stations, &c., and for mooring posts, buoys, &c., belonging to or provided by the Board, or in respect of any services rendered by it in connexion with the river where no rates are specially fixed. (8) Section 74 gives the Board power to set aside annually a sum not exceeding £2, 10s. per centum of its revenue as a reserve fund, to be accumulated for the purpose of meeting any extraordinary demand. It is provided that the reserve fund shall not exceed the sum of £20,000. (9) Section 75 provides that all the revenues of the Board shall be applied to the purposes of payment of the expenses incidental to the Order, the working and establishment expenses, and the cost of maintenance, repair, and renewal of the Board's undertaking, the payment of interest on borrowed monies, the provision for instalments and sinking fund payments, and to the establishment and maintenance of the above-mentioned reserve fund. It is provided that the balance (if any) shall be applicable to such purposes and in such manner for the purposes of the undertaking of the Board as the Board may determine. (10) The sole revenues of the Board, apart from interest on temporary investments in regard to which no question arises, have been derived from the shipping dues above mentioned, which dues have been fixed by resolution of the Board at one halfpenny per registered ton, and have been levied and collected by the Board since October 1921. (11) Assessments for the same years as those at present under review were made upon the Board under Schedule A of the Income Tax Act, 1918, Number III., Rule 3. On the 23rd July 1926 the Board appealed against the said assessments under Schedule A, and the Board's appeal was sustained by the General Commissioners of Income Tax, and the assessments were discharged. In terms of section 149 of the Income Tax Act, 1918, the Commissioners of Inland Revenue appealed against the said decision of the General Commissioners of Income Tax to the First Division of the Court of Session as the Court of Exchequer in Scotland, which Court dismissed the appeal (1928 S. C. 286). The Commissioners of Inland Revenue thereafter appealed to the House of Lords, who refused their appeal, and adhered to the decision of the General Commissioners (vide Commissioners of Inland Revenue v. Forth Conservancy Board, 1929 S. C. (H. L.) 1). (12) The operations of the Board in carrying out its conservancy duties have related entirely to matters connected with the navigation of the River and Firth of Forth, such as the maintenance, and improvement of the lighting and buoyage of the river; the removal of wrecks and other obstructions; the enforcement of bye-laws passed by the Board for vessels navigating the river, and also the survey and charting of the river. A number of the...
To continue reading
Request your trial