Comptroller of Income Tax v BLM

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 17 October 2013
• Neutral Citation: [2013] SGHC 212
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 331 of 2013 (Summonses Nos 3108—3113 and 5041 of 2013)
• Year: 2013
• Published date: 22 October 2013
• Hearing Date: 16 May 2013,31 May 2013,23 May 2013,09 May 2013,26 August 2013,02 May 2013,21 May 2013,22 July 2013,07 October 2013
• Plaintiff Counsel: Patrick Nai Thiam Siew, Vikna s/o Thambirajah and Jimmy Goh (Inland Revenue Authority of Singapore)
• Defendant Counsel: Sundareswara Sharma (ATMD Bird & Bird LLP)
• Subject Matter: Revenue Law,International Taxation,Double taxation agreement Civil Procedure,Stay of Proceedings
• Citation: [2013] SGHC 212

Choo Han Teck J:

This was an application by the plaintiff for the disclosure of various bank statements by the Inland Revenue Authority of Singapore (“IRAS”) to the National Tax Agency of Japan (“J-NTA”) pursuant to s 105J of the Income Tax Act (Cap 134, Rev Ed 2008) (“the Act”) and art 26 of the Agreement between the Government of the Republic of Singapore And the Government of Japan for the Avoidance of Double taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (“the Treaty”). I granted the application on 31 May 2013. The account holders in question applied for leave to intervene and also to stay or discharge that order.

On 22 November 2012, J-NTA issued a letter of request (“the Request”) to IRAS, requesting disclosure of various bank statements from the defendant bank, BJM. This related to ongoing tax examinations in Japan in relation to the applicant, a Japanese national, and seven other account-holders. IRAS reviewed the Letter of Request. On 19 April 2013, it made an ex parte application to the High Court pursuant to s 105J, read with ss 105BA, 105D and 105F of Act and O 98 r 2 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), for the following orders: That the defendant produce within 21 days from the date of the Order all bank statements for the period 1 January 2006 through 31 December 2011 (both dates inclusive) in relation to eight accounts held by the account holders listed, including the specified accounts which they named in the summons itself; That the defendant produce copies of the documents named in the summons to an authorised officer of the plaintiff or applicant not later than the end of the period of 21 days from the date of the Order; Subject to the preceding sub-paragraph, no person is to inspect or take a copy of any document relating to these proceedings without leave of the High Court under s 105J(9) of the Act; and That the Order shall have effect and remain in force until such Order is varied or discharged.

In the accompanying affidavit, IRAS set out the grounds of its application, exhibited the Request, and stated its belief that the Request set out all the information prescribed in the Eighth Schedule of the Act and that the conditions specified in s 105J(3) were fulfilled. In other words, IRAS’s application fulfilled all the requirements set out in s 105D of the Act and O 98 r (2)2 of the Rules of Court.

IRAS also served the applicant with notice of the application on 15 April 2013. Counsel for the applicant and IRAS appeared before me four times in May 2013. Counsel for the applicant, Mr S Sharma (“Mr Sharma”) submitted, inter alia, that the Request was invalid as it was made pursuant to a tax examination and not investigations into tax evasion. Mr Sharma also argued that the relevant tax authority in Japan had withdrawn its investigations into the applicant. Finally, Mr Sharma submitted that the J-NTA had no right to make the Request in the first place as under Japanese law, the applicant would have no obligation to disclose equivalent information in Japan.

The Act provides a two-step process for filtering out unmeritorious requests. The first step is an assessment of the Request by IRAS. The second is an order by the High Court. Section 105J of the Act provides that the High Court may make an order that a person having possession or control of information protected from unauthorised disclosure under the Banking Act (Cap 19) disclose that information to an authorised officer upon fulfilment of the following two conditions: That the making of the order is justified in the circumstances of the case; and It is not contrary to the public interest for a copy of the document to be produced or that access to the information be given.

How the court should assess such justification is set out in the Eighth Schedule of the Act. This schedule sets out the information to be included in a request for information under Part XXA of the Act. The information given must also be foreseeably relevant for carrying out the provisions of the Treaty or the administration and enforcement of the tax laws of the requesting country; see Comptroller of Income Tax v AZP [2012] SGHC 112 (“AZP”).

During the Parliamentary Debate on 19 October 2009, a concern was voiced about the need to protect the privacy of persons affected by requests for information which were not made bona fides or were made simply as a “fishing expedition”. Mr Tharman Shanmugaratnam responded by explaining that such requests “would be screened out [through the process set out in] the Eighth Schedule, which spells out very clearly the information that a requesting jurisdiction has to provide to IRAS when...