Komoco Motors Pte Ltd v Registrar of Vehicles and another

• Judgment Date: 17 May 2007
• Date: 17 May 2007
• Docket Number: Originating Summons No 1599 of
• Court: High Court (Singapore)

Komoco Motors Pte Ltd

Plaintiff

and

Registrar of Vehicles and another

Defendant

[2007] SGHC 74

Judith Prakash J

Originating Summons No 1599 of 2006 (Summons No 4519 of 2006)

High Court

Administrative Law–Judicial review–Fettering of discretion and abrogation of responsibility–Registrar of Vehicles having statutory discretion to determine duty payable on imported cars–Registrar adopting policy of basing duty payable on Singapore Customs' valuation–Whether Registrar entitled to adopt policy–Whether Registrar failed to consider whether exceptions should be made–Whether responsibility abrogated to Customs–Rule 7 (3) Road Traffic (Motor Vehicles, Registration and Licensing) Rules (Cap 276, R 5, 2004 Rev Ed)

Komoco Motors Pte Ltd (“Komoco”), a car importer, had paid to the Registrar of Vehicles (“the Registrar”) an additional registration fee (“ARF”) levied on 17,449 cars it had imported pursuant to the Road Traffic (Motor Vehicles, Registration and Licensing) Rules (Cap 276, R 5, 2004 Rev Ed) (“the Rules”). Singapore Customs (“Customs”), which had previously levied excise duty on the same cars, conducted a post-clearance audit on Komoco, and determined that Komoco had made incorrect declarations as to the open market value (“OMV”) of the cars. Customs offered to compound the offence on payment by Komoco of the shortfall in the excise duty collected resulting from the incorrect declaration. Komoco made representations to Customs that the OMV had been correctly declared. Customs maintained that its original decision was correct and Komoco accepted Customs' offer of composition in order to avoid prosecution.

Customs informed the Registrar of the under-declaration of the OMVs. The Registrar found that one of the cars had yet to be registered, but also determined that there had been a shortfall in ARF payments amounting to over $7m in relation to the remaining 17,448 cars, based on Customs' reassessment of the OMVs. Komoco sought judicial review of the Registrar's decision. However, the parties reached an agreement for the Registrar to reconsider her decision before the application was heard.

Pursuant to the agreement, Komoco met with the Registrar to present its case. About two months later, the Registrar called a meeting at which she informed Komoco that her previous decision on the additional ARF payable remained. Komoco again sought judicial review of the Registrar's decision arguing that the Registrar had fettered her discretion or, alternatively, had abrogated her responsibility under r 7 (3) of the Rules to determine the OMV of imported cars.

Held, granting the application:

(1) When the Registrar “determined” the value of a motor vehicle under r 7 (3) of the Rules, it was a requirement under the Rules that she exercised her discretion: at [23].

(2) Government agencies that exercised their functions and carried out their duties within a statutory framework were entitled to adopt a general policy in the exercise of such functions provided they satisfied the requirements set out in Lines International Holding (S) Pte Ltd v Singapore Tourist Promotion Board [1997] 1 SLR (R) 52. The Registrar had both practical and policy reasons for deciding to follow Customs' computation of the OMV. In the circumstances, the Registrar's policy was reasonable: at [21], [26] and [29].

(3) In the implementation of a policy, an authority must be willing to make exceptions by necessarily taking time to hear an applicant's case. The authority must hear that applicant's case in full before it made its decision and not resolve to dismiss it from the start: at [32].

(4) As Komoco had the opportunity to put forward its arguments to the Registrar for consideration, its complaint that it did not have a full hearing was not substantiated: at [40].

(5) The Registrar was strongly influenced by the fact that her adoption of Customs' OMV valuations was due to various policy considerations. Therefore, the Registrar did not give genuine consideration to the contentions raised by Komoco, fettered her discretion in relation to the valuation of the cars and was not prepared to hear out Komoco's case with an open mind: at [46], [51] and [52].

(6) An authority could not abrogate its own authority by taking orders from other bodies unless it was under a legal duty to do so: at [53].

(7) No independent evaluation process took place when the Registrar calculated the initial ARF from the OMV value in the importer's application. In respect of the revised OMVs after Customs' post-clearance audit, the Registrar did not conduct an independent evaluation. The Registrar invested absolute trust in the arrangement with Customs to the extent that even her review was conditional on further advice from Customs. The Registrar was not prepared to find out whether exceptional or compelling reasons existed in Komoco's case for her to disagree with Customs and had therefore abrogated her discretion under r 7 (3) of the Rules: at [59], [60], [65] and [66].

(8) The Registrar had the power to revise the ARF payable on a motor vehicle even if such revision took place after the first registration under r 7 (3) of the Rules: at [71].

Associated Provincial Picture Houses, Limited v Wednesbury Corporation [1948] 1 KB 223 (folld)

H Lavender and Son Ltd v Minister of Housing and Local Government [1970] 1 WLR 1231; [1970] 3 All ER 871 (folld)

Lines International Holding (S) Pte Ltd v Singapore Tourist Promotion Board [1997] 1 SLR (R) 52; [1997] 2 SLR 584 (folld)

Customs Act (Cap 70, 2004 Rev Ed) s 128

Road Traffic (Motor Vehicles, Registration and Licensing) Rules (Cap 276, R 5, 2004 Rev Ed) r 7 (3) (consd);rr 3 (1), 3 (2), 7, 7 (1), 7 (8), First Schedule Pt II

Harry Elias SC, Philip Fong, Navin Joseph Lobo and Sharmini Selvaratnam (Harry Elias Partnership) for the applicant

Quentin Loh SC, Simon Goh and Baldev Singh (Rajah & Tann) for the first respondent

Jeffrey Chan and Dominic Zou for the second respondent.

Judgment reserved.

Judith Prakash J

1 This summons relates to the proper determination of the extra additional registration fee (“ARF”) payable in respect of 17,448 motor cars (“the Cars”) imported by the applicant, Komoco Motors Pte Ltd (“Komoco”). Komoco has applied for judicial review of the decision of the Registrar of Vehicles (“the Registrar”) that the ARF on the Cars had been undercharged and that there was an additional sum amounting to $7,028,559 payable as ARF by Komoco based on the revised open market values (“OMVs”) of the Cars as well as an amendment fee of $366,408 charged at the rate of $21 per car.

2 Komoco is seeking:

(a) an order of certiorari to quash the Registrar's decision; and

(b) further or in the alternative, an order of mandamus to compel the Registrar to exercise her discretion in accordance with the law and reconsider her decision.

Background

3 When a motor vehicle is imported into Singapore, the Singapore Customs (“Customs”) is the first government body to levy a tax, ie, excise duty, on the vehicle. This duty is based on the OMV of the motor vehicle.

4 OMV is the value of a motor vehicle assessed at the price it would normally fetch between independent buyers and sellers in an open market. The method of valuation (prior to 1 April 2003) was based on the Brussels' Definition of Value (“BDV”) and generally included the following expenses in arriving at the taxable value of a motor vehicle:

(a) Transaction value: the price paid or payable for a vehicle by a buyer to a supplier on a cargo, insurance and freight (“CIF”) basis.

(b) Handling charge: the handling expense for transferring a vehicle from the conveyance carrier into land if the vehicle arrived by air or sea. Handling charges were imputed as 1% of the vehicle's CIF value.

(c) Agency uplift: expenses for advertising, promotion, warranties, as well as showroom and warehousing costs. Generally, agency uplift was estimated by Customs as a percentage of a vehicle's invoice price. This percentage was fixed for certain periods of time and generally reviewed on an annual basis.

5 To assist Customs in assessing the OMV of the vehicle and thus the duty payable, the importer was required to submit a declaration of fact (“DOF”) to Customs. The information in the DOF declared the agency uplift components of that particular importer. Hence, expenses incurred by the importer in getting its motor vehicle off the ship, into its showroom and into the hands of the customer had to be properly and correctly declared in the DOF. Customs used this information to compute the uplift component of the OMV. Customs carries out periodic checks, known in the industry as “post-clearance audits”, on the accounts and ledgers of motor vehicle importers to verify the accuracy of the information and figures given in the DOF and, accordingly, the correctness of the uplift percentages applied during previous assessment periods.

6 When a vehicle is registered, various taxes are payable to the Registrar pursuant to the Road Traffic (Motor Vehicles, Registration and Licensing) Rules (Cap 276, R 5, 2004 Rev Ed) (“the Rules”). Among these is the ARF. Under r 7, the Registrar levies an ARF on importers based on a percentage of the value of the motor vehicles. The exact percentage to be applied is provided for under Pt II of the First Schedule of the Rules. In practice, in order to determine the ARF payable, the Registrar uses the OMV as declared by the importer to Customs as the value on which the ARF is calculated.

7 The application for registration by an importer such as Komoco would be submitted via the “On-Line Dial-up System - Vehicle Registration”. This application is made pursuant to rr 3 (1) and 3 (2) of the Rules. In this application, information such as the OMV (being the same OMV as previously declared to Customs), the ARF rate, the registration fee and road tax payable are entered by the importer and transmitted electronically...