Kuo Ching Yun and Another v H & L Investments Holding Pte Ltd

• Jurisdiction: Singapore
• Judge: Christopher Lau JC
• Judgment Date: 15 September 1995
• Neutral Citation: [1995] SGHC 218
• Docket Number: Originating Summons No 92 of 1995
• Date: 15 September 1995
• Year: 1995
• Published date: 19 September 2003
• Plaintiff Counsel: S Muthu Kumaran (WT Woon & Co)
• Citation: [1995] SGHC 218
• Defendant Counsel: Sahul Hameed (Hameed & Co)
• Court: High Court (Singapore)
• Subject Matter: Goods and services tax (gst),Revenue Law,Goods and ss 38 & 40 Services Tax Act (Cap 117A, 1994 Ed),Sale of commercial property,Whether first plaintiff had locus standi,Sale of land,Whether vendor or ultimate purchasers had liability to pay GST where contract of sale was silent,Land,Option to purchase property,condition 12 Law Society's Conditions of Sale

This dispute arises out of the sale of a commercial property at 190 Middle Road #17-01, Singapore (`the property`) for a sum of $1,629,762.10 in late 1994. The dispute is whether the liability to pay goods and services tax under the provisions of the Goods and Services Tax Act (Cap 117A, 1994 Ed) (`the Act`) lies on the first and/or second plaintiffs or the defendants. Since 1 April 1994, in a transaction for the sale and purchase of commercial property in Singapore, goods and services tax (`GST`) is payable.

On 1 September 1994, H & L Investments Holdings Pte Ltd, the defendants, were given an option to purchase the property by the then owners of the property, Timothy Investments Pte Ltd. The defendants exercised this option on 3 October 1994 and on 26 October 1994, in turn gave an option to purchase the same property to one Wang Chen Wing and/or nominee. The option given to Wang Chen Wing by the defendants was exercised by Kuo Ching Yun, the first plaintiff, on 7 November 1994 who then on 12 December 1994 transferred his rights and interests in the contract to W & N Management Pte Ltd, the second plaintiffs.

With effect from 1 January 1995, the defendants were registered with the Inland Revenue Authority of Singapore as a GST registered company.

On 3 January 1995, the sale of the property was completed by way of a tripartite transfer. On that date the property was transferred to the second plaintiffs and GST paid by the solicitors for the plaintiffs under protest; the defendants having disputed their liability to pay such tax. The dispute between the plaintiffs and the defendants was whose responsibility it was (either under the terms of the contract for the sale of the property or in law) to pay the GST on the day fixed for completion of the sale of the property, 3 January 1995, there being no dispute that such tax was payable.

Thereafter, on 2 February 1995, the plaintiffs filed an application by way of an originating summons for the necessary directions for the return of this sum by the defendants to them.

The plaintiffs` position was that as :

(1) s 8(3) [`Tax on any supply of goods or services is a liability of the person making the supply and (subject to provisions on accounting and payment) becomes due at the time of supply.`] of the Act provides that tax is a liability of the person making the supply, in this case the defendants; and

(2) there was no provision in the option between the plaintiffs and the defendants for the plaintiffs to pay the defendants` GST liability or the GST attracted by the sales;

the principal rules under the Act, namely, reg 65(1) [ `Where any taxable person displays, advertises, publishes or quotes in any manner the price of any supply of goods or services he makes or intends to make, such price shall include the tax that is chargeable on the supply under the Act unless the Comptroller approves otherwise under reg 66.`] of the Goods and Services Tax (General) Regulations 1993, applied and that is, where the vendor quotes a price, then that price is inclusive of GST, the exceptions under reg 66 not being applicable.

Hence the price quoted by the defendants for the sale was all inclusive and it included the GST.

On the hearing of this application, I determined that the plaintiffs were not liable to pay the GST amounting to $49,192.06 to the defendants for the purchase of the property on its completion on 3 January 1995 and made the following orders:

(1) the defendants refund or repay to the second plaintiffs the sum of $49,192.06 together with interest thereon at the rate of 6% pa from 3 January 1995 to date of the refund or repayment; and

(2) the defendants pay the costs of and incidental to this application.

The defendants have appealed against my determination and the orders I made.

The issues

At the hearing, the following matters arose for decision :

(i) as a preliminary point, whether the first plaintiff had locus standi in these proceedings;

(ii) as a substantive issue, whether the Act imposed liability for payment of GST under the Act on the plaintiffs or the defendants; and

(iii) whether condition 12 of the Law Society Conditions of Sale 1994 imposed a contractual obligation on the plaintiffs to pay the GST.

The preliminary issue

The first...