THE HIGH COURT
2002 99R
BETWEEN
THE REVENUE COMMISSIONERS
APPELLANTS
AND
BUS EIREANN
RESPONDENT
JUDGMENT of Mr. Justice Kearns delivered the 7th day of March, 2003.

This is a case stated by an Appeal Commissioner in a revenue matter for the determination by the High Court pursuant to Section 941 of the Taxes Consolidation Act, 1997, as applied by Section 105 (3) of the Finance Act, 1995. It concerns a net point of statutory interpretation.

Paragraph 12 (11) of the Imposition of Duties (No. 221) (Excise Duties) Order, 1975 (S.I. No. 307/75) as amended by Section 60 (11) of the Finance Act, 1983, provides for a rebate of excise duty on hydrocarbon oil which has been used by a mechanically propelled vehicle in the course of the provision of a passenger road service within the meaning of Section 2 of the Road Transport Act, 1932 (as amended by Section 66 of the Road Transport Act, 1933).

The terms of paragraph 12 (11) are as follows:-

"Where a person who carries on a passenger road service within the meaning of Section 2 of the Road Transport Act, 1932 ... and who either is the licensee under a passenger licence granted under Section 11 of that Act in respect of the passenger road service or is exempted from the application of Section 7 of that Act shows to the satisfaction of the Revenue Commissioners that hydrocarbon oil on which the duty of excise imposed by this paragraph has been paid has been used by him for combustion in the engine of a mechanically propelled vehicle

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used in a passenger road service in respect of which the licence was granted, the Revenue Commissioners may, subject to compliance with such conditions as they may think fit to impose, repay to the licensee duty ... on hydrocarbon oil so used …”

‘Passenger road service’ was defined in Section 2 of the Road Transport Act, 1932 as follows:-

"The expression passenger road service' means a service of one or more mechanically propelled vehicles travelling wholly or mainly on public roads and carrying passengers (whether passengers luggage, merchandise, and mails, or any of them are or not also carried) between specified terminal points or along a specified route for separate charges in respect of each passenger.”

This Section was amended by Section 66 of the Road Transport Act, 1933 which inserted the words "or otherwise" after the words "specified route".

The facts of the case may be briefly stated. Bus Eireann is a subsidiary of Coras Iompair Eireann. It carries on the business of providing passenger transport services by bus. The majority of those services are provided on routes that begin and end in the State. However, some of those services are provided on a cross channel basis between cities and towns in the State and destinations in the United Kingdom. Between April 1992 and April 1997, fuel rebates were paid by the Revenue Commissioners to Bus Eireann in respect of fuel used by Bus Eireann on its buses travelling on routes which entailed travel by road in both Ireland and the United Kingdom. In December 1996, the Revenue Commissioners became aware that the rebate included duty in respect of fuel combusted in the United Kingdom and thereafter maintained that a rebate was only allowable on fuel bought and used in the State. Bus Eireann for its part maintained that the relevant legislation did not preclude them from obtaining a rebate on fuel bought within the State and used outside the State. They

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maintained that the definition of `passenger road service' contained in the Road Transport Act, 1932 did not state that travelling or carrying passengers was restricted to Irish public roads only. For its part, the Revenue Commissioners contended that the laws enacted by the Oireachtas only have application within the State.

Thereafter, Bus Eireann brought an appeal from the Revenue Commissioners decision under Section 104 of the Finance Act, 1995.

The matter ultimately came before the Appeal Commissioner in April 1999 when, having heard submissions from both sides, the Appeal Commissioner reached the following conclusion:-

“(a) Bus Eireann had met all of the appropriate tests laid down in the legislation

(b) the legislation required that the hydrocarbon fuel must be used in the engine of the motor vehicle providing passenger road services. It is clear that this was the way in which the fuel was being used by Bus Eireann in this case.

(c) the legislation did not require the use to be made of the fuel in any particular geographic area.

(d) I also found as a fact that no fuel purchased by Bus Eireann in the United Kingdom had been included in the claim made by Bus Eireann for a rebate under the 1975 Order.

I came to the conclusion which I did on the basis of the following primary facts: -

"(a) all fuel in issue in the appeal before me was fuel which had been purchased by Bus Eireann in the State

(b) Bus Eireann carries on a passenger road service

(c) part of that service involves travel outside the State (and in particular in Britain). However, there is nothing in the legislation which indicated to me that as a matter of law this invalidated the claim made by Bus Eireann.

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Immediately after I announced my decision, the Revenue Commissioners expressed dissatisfaction with my determination and I have been asked by them to state the following case for determination by the High Court pursuant to Section 941 of the Taxes Consolidation Act, 1997:-

"Is Bus Eireann, while operating bus route between places in the State and places in the United Kingdom carrying on a road passenger service within the meaning of Section 2 of the Road Transport Act 1932?”

SUBMISSIONS OF THE PARTIES

Mr. McDonald S.C. on behalf of the Revenue Commissioners submits that one of the conditions which must be met before a rebate is payable is that the mechanically propelled vehicle must have been used in a passenger road service within the meaning of Section 2 of the Road Transport Act, 1932.

Accepting that the imposition of tax must always be in express, clear and unambiguous terms, Mr. McDonald submitted that any exemption from tax, such as was argued for in the instant case, is governed by the same considerations. He cited in support the relevant principles of interpretation as set out in Texaco (Ireland) Limited v. Murphy [1991] 2 I.R. 449 per McCarthy J. at pp. 454-455, Cane Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 K.B. 64 per Rowlatt J. at p. 71 and what had been said by Kennedy C.J. in Revenue Commissioners v. Doorley [1933] I.R. 750 at pp. 765-766.

In the ordinary way, Mr. McDonald submitted, one would simply look at the words of the relevant provision in the Taxing Act to construe the ambit of the relevant exemption. The words of the Act would be given their literal meaning. However, Article 12(11) does not, he contended, purport to use the phrase `passenger road service' in a literal sense.

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It expressly says that the meaning to be given to that phrase is that which applies under the 1932 Act. He contended therefore it was necessary to consider the provisions of the 1932 Act as a whole in order to determine whether or not it could be said to have been intended to apply to passenger road services extending beyond the territory of the State. He further submitted that it was to be borne in mind in this regard that the 1932 Act is not a taxing statute.

Before turning to the provisions of the Act, Mr. McDonald drew attention to the following important principles:-

“(a) it is accepted that the State can purport to legislate in respect of extra territorial activities Re: Criminal Law (Jurisdiction) Bill 1975 [1977] I.R. 129 at p. 148-149)

(b) it is further accepted that this jurisdiction is confined to circumstances where the State makes persons answerable in the courts of the State for activities occurring outside the State. It is acknowledged that the State is prohibited by Article 3 of the Constitution from enacting laws which are applicable beyond the territory of the State.

(c) very clear explicit language is required before a court will construe a statute as having any extra territorial effect. There is a presumption that general words used in legislation are limited so as to have effect within the effective jurisdiction of the State only (Halsbury's "Laws of England" (4th edition) (1995), Volume 41 (1) at par. 1317)

(d) this presumption that the legislator does not intend that its legislation have extra territorial effect (in the absence of clear words to the contrary) is particularly strong where the legislation in issue is regulatory legislation (see Colauhoun v. Heddon [1890] 2 T.C. 621 per Lord Esher MR at pp. 625-626).

In relation to the 1932 Act, there is nothing in the definition of ‘passenger road service’ which suggests that it was intended to embrace both services within the State and those provided partly outside the State. What was clear was that such services must be provided wholly or mainly on public roads. That expression clearly had a meaning in Irish

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law, but, Mr. McDonald asked, what meaning could it have in the context of a purported application to roads in foreign countries?

When considering the definition of ‘passenger road service’ in the context of the 1932 Act as a whole, it is manifest, Mr. McDonald submitted, that the expression was not intended to embrace services performed wholly or partly outside the State. The purpose of the Act can only be to regulate services in Ireland. To begin with, the long title of the Act provides that that is for the ‘regulation and control of the carriage of passengers by road’. Section 7 of the 1932 Act (from which Bus Eireann is exempt) prohibits any person carrying on a passenger road service "save under and in accordance with the licence ... granted to him under this Act." These can only be licenses granted in Ireland for services to be delivered in Ireland. This view could only be re-enforced by considering Section 8 (which requires that a person must apply to the Minister for a passenger licence authorising him to carry on a specified passenger road service) and Section 10 which provides for the granting of an annual passenger licence in respect of the particular passenger road service specified in the licence. Section 11 (3) deals with applications for licences in respect of services on routes which were not in existence prior to the 1932 Act and requires the Minister to have regard to a number of matters including:-

"Whether the service ... in respect of which such application is made is required in the public interest having regard to the passenger road services and other forms of passenger transport available to the public on or in the neighbourhood of the route of the proposed service.”

Mr. McDonald submits that if it had been intended by the Oireachtas that the expression `passenger road service' in the Act should extend to cross channel services, the legislation could not have imposed such obligations on the Minister without so specifying. If such services included those performed partly outside the State, it would mean that in any

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application for a licence to carry on such a service, the Minister would then be required to have regard ‘in the public interest’ to the services and other forms of transport already available to the public on the route of the proposed service. He would therefore be looking at the needs of the public in places other than the State. He would be required to form a view as to the public interest in relation to places beyond the boundaries of the State, a concept that runs directly counter to the principle of the comity of nations. It would make no sense at all that an Irish Minister would be reviewing the needs of the public, in the U.K. or elsewhere. Furthermore, Section 12 of the 1932 Act sets out a large number of conditions which the Minister may attach to a licence granted under the Act, none of which specifically relates to anything occurring outside the State.
It follows, Mr. McDonald submitted, that the reference to a `passenger road service' in the 1975 Order could only be seen as a reference to passenger road services carried on within the confines of the State.

In reply, Mr. Sreenan S.C. stated that the basis of the Revenue Commissioners argument appeared at all times to have been that to grant a rebate on the excise duty in respect of motor fuel combusted while the vehicle was travelling in the United Kingdom would involve the extra territorial application of laws and would be contrary to the Constitution. He submitted that such a view was based on a fundamental misunderstanding of the nature and effect of the statutory provisions giving rise to the entitlement to a rebate.

He submitted that the 1975 Order makes a rebate dependent on:-
(a) excise duty having been paid in Ireland on motor fuel

(b) that motor fuel being used for combustion in the engine of a vehicle

(c) that vehicle being used in a passenger road service.

Mr. Sreenan submitted that there is no requirement in the 1975 Order that the passenger road service begin and end in Ireland. There is no requirement in the 1975 Order, he suggested, that the combustion take place in Ireland.

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The grant of a rebate in respect of motor fuel purchased in Ireland did not involve the extra territorial application of legislation - even if part of the motor fuel is combusted abroad. The legislation still applies only to excise duty on hydrocarbon oils purchased in Ireland, not those purchased abroad. The fact that entitlement to a rebate is linked to an event which may or may not occur abroad is no more determinative of the issue than it is in relation to the deductibility of expenses incurred abroad or the assessment of income earned abroad for the purposes of income tax.

While plying routes in the United Kingdom, Mr. Sreenan contended there could be no doubt but that Bus Eireann was providing a passenger road service and was not seeking any rebate on hydrocarbon oils purchased save those purchased in Ireland in respect of which excise duty had been paid in Ireland and which had been combusted in vehicles operating passenger road services. In effect, the Revenue Commissioners were seeking to amend the 1975 Order by inserting the words "in Ireland" after the words "used by him".

It was not germane to the rebate issue that part of a journey takes place in another jurisdiction. It would mean, if Mr. McDonald was correct, that the service for that period of time was not a ‘passenger road service’ which would have the consequence that no licence would be required by the carrier and that passengers travelling on such service would not have the protection of the regulation and control of the market envisaged by the 1932 Act. Mr. Sreenan contended that the measures contained in the 1932 Act are there simply for the purposes of market regulation and that anybody operating a service travelling on public roads carrying passengers between specified terminal points, any part of which journey takes place in Ireland, requires a licence (or an exemption) under the 1932 Act. The fact that it is a passenger road service is used as the criterion for rebate of oil and the taxable event is simply the purchase of oil in Ireland which is ultimately used in the vehicle. If, for example, Bus Eireann filled the tank in Holyhead for the portion of the journey back to

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Galway, it would be entitled to no rebate on the fuel even though it was combusted in the vehicle in Ireland.

Mr. Sreenan contended that the decision in Revenue Commissioners v. Doorley [1933] I.R. 750 supported his contention.

That case was concerned with certain duties chargeable upon legacies by the Stamp Duties (Ireland) Act 1842. Section 38 stated what was to be deemed a legacy under the Act, and added a proviso "that nothing herein contained shall extend or be construed to extend to charge with duty in Ireland any legacy given for the education or maintenance of poor children in Ireland, or to be applied in support of any charitable institution in Ireland, or for any purpose merely charitable." It was held by a majority of the Supreme Court that the concluding words of this proviso "for any purpose merely charitable" were not to be construed as limited to any purposes merely charitable in Ireland.

Mr. Sreenan cited the following passage from the judgment of Fitzgibbon J. (at p. 772):-

"There is no ground whatever for the suggestion that the construction which I place upon the proviso necessitates a further addition of the words "or elsewhere" after the words "in Ireland". "Any purpose merely charitable" prima facie means "any such purpose anywhere". If the words "in Ireland" be added the proviso is limited to such purposes in Ireland. If instead of "in Ireland" the word "elsewhere" be added the proviso is limited to such purposes elsewhere than in Ireland. If the proviso is altered to "any purpose merely charitable in Ireland or elsewhere ", the effect is the same as if the words "in Ireland or elsewhere " had not been added, either phrase would mean " any purpose merely charitable anywhere ". The repetition of the words "in Ireland" after the exemption in favour of legacies for the maintenance or education of poor children, and the exemption in favour of legacies in support of any charitable

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institution appears to me to add force to the effect of the omission of these words in the final exemption in favour of legacies for any purpose merely charitable.”

Mr. Sreenan also relied on a passage from the judgment delivered in Colquhoun (Surveyor of Taxes) v. Heddon [1890] 2 T. C. 621 at p. 625) where Lord Esher MR stated:-

"It seems to me that we ought to consider that parliament will, unless it explicitly determines otherwise, when, even if it should go beyond its rights with regard to the comity of nations, if it enacted such a thing in explicit terms the courts here must obey that enactment. Yet if it does not do so in explicit terms it seems to me that the proper construction to be put by the courts on general words used in an Act of parliament ... should be taken to deal only with such things as are within the description of the general words and within the jurisdiction of our parliament, and that we ought to assume that parliament, unless it expressly declares otherwise, is only dealing, when it deals with things in general words, with things over which our parliament has properly jurisdiction.”

In other words Mr. Sreenan urged, the 1932 Act can only be construed as dealing with matters over which the Oireachtas had jurisdiction. No question of extra territorial legislative effect arose here. The 1932 Act quite simply applies to Irish licensed bus operators who are regulated in Ireland. The Revenue, he submitted, were seeking to impute a limitation on the words of the 1932 Act by a misapplication of the concept of extra-territoriality.

In reply, Mr. McDonald submitted that Revenue Commissioners v. Doorley was of no assistance to the respondents, given that that case had been decided solely by reference to ordinary principles of statutory interpretation. The various references "to Ireland" in the

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proviso inexorably led to the conclusion that the legislature had some other intention when it came to the final words of the proviso which omitted any reference to Ireland.

CONCLUSION

It seems clear to me that the outcome of this case must turn on the question whether or not the words ‘passenger road service’ are to be understood in the general or ordinary sense which those words may be deemed to have, or as defined and understood by reference to Section 2 of the Road Transport Act, 1932, when viewing that Act as a whole. If, as Mr. Sreenan suggests, the former is the correct test to apply, one might legitimately enquire why any peculiar or particular definition was given to these words by Section 2 of the Road Transport Act, 1932 and why the 1975 Order refers to ‘passenger road services’ as having the meaning ascribed by the 1932 Act.

It seems to me that the expression ‘passenger road service’ has that peculiar or special meaning which the Act gives to it. Virtually every part of the statutory definition of ‘passenger road service’ as defined is further defined in Section 2 of the Act. A ‘mechanically propelled vehicle’ is defined in a particular way, as is ‘passengers luggage’, ‘merchandise’, ‘mails’ and ‘charges’. Furthermore, the reference to ‘specified terminal points along a specified route’ can only be seen as having a meaning and context within the State, given that the 1932 Act is regulatory in purpose for licenses and licensees in Ireland.

Indeed the headnote provides that the Road Transport Act, 1932 is:-

“An Act to provide for the regulation and control of the carriage of passengers by road and to confer on certain companies authority to carry passengers and merchandise by road and to make provision for other matters connected with the matters aforesaid.”

I think Mr. McDonald is correct when he submits that the expression `passenger road service' can only be properly interpreted by looking at the 1932 Act as a whole, from

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which it plainly appears that the panoply of licensing and other requirements contained in the Act are to be applied to passenger licences and passenger road services in Ireland and not beyond. There is no reason to extend the definition of ‘passenger road service’ so as to mean "passenger road service anywhere."

That being so, I accept Mr. McDonald's submission that specific words would be necessary to create an exemption in favour of the respondents for a rebate in respect of oil combusted outside Ireland.

In my opinion, therefore, Bus Eireann, while operating bus routes between places in the State and places in the United Kingdom is not carrying on a ‘passenger road service’ within the meaning of Section 2 of the Road Transport Act 1932.

I will accordingly in the circumstances answer the question posed in the Case Stated "no".