The Director General, Mauritius Revenue Authority v Paradis Brabant Hotel (Mauritius)

For a receipts-based tax, liability arises only when money is actually received. Unless the legislation indicates otherwise, the applicable rate is the rate prevailing on that date, rather than on the date when the goods or services were supplied or the contract was made.

Reading the Hotel and Restaurant Tax Act 1986 with the Finance Act 1998, the staged rate changes applied to receipts arising on or after the specified dates. Billing, record-keeping and cessation provisions did not displace that construction. Practical concerns about customer recovery or manipulation could not justify departing from clear statutory language.

The Mauritius Revenue Authority appealed against a decision of the Supreme Court of Mauritius, which had upheld the Assessment Review Committee. The dispute concerned the rate of Hotel and Restaurant Tax payable on hotel and restaurant receipts during periods when the statutory rate changed.

The respondents treated the applicable rate as the rate prevailing when payment was received. The Authority argued that the rate was fixed when the goods or services were supplied. The central issue was whether the relevant date was receipt or supply.

1. Majority disposition. Lord Neuberger, with Lord Toulson and Sir Paul Girvan agreeing, dismissed the appeal and upheld the decision of the Supreme Court of Mauritius and the Assessment Review Committee.
2. Under section 3 of the Hotel and Restaurant Tax Act 1986, HRT was a tax on taxable receipts. Receipt of money was the necessary and sufficient condition for liability, and liability accrued on the receipt. Although section 3(2) did not expressly identify the date for fixing the rate, the natural inference was that the rate was the rate prevailing when the receipt was received.
3. Sections 5 and 6 did not support the Authority’s contrary construction. A bill did not create liability, and the record-retention provision was at most consistent with payment being the relevant event. Section 11(1)(b)(ii) was a special deeming provision accelerating liability on cessation of business. It was equally consistent with either interpretation and was not a reliable guide to the ordinary basis of assessment. Section 11(2) was irrelevant to the issue.
4. Section 3 of the Finance Act 1998 introduced staged rate reductions but gave no contrary indication. Sections 24(3) and 24(4), read in the context of the 1986 Act, showed that taxable receipts arising on or after the specified dates meant sums received on or after those dates. The same statutory scheme supported the zero-rate change under section 24(5).
5. Practical arguments did not justify departing from the statutory meaning. HRT was not necessarily a tax charged as part of the price of the supply, and a supplier could quote a gross price while bearing the risk of rate changes. HRT was a tax on receipts, not on the underlying transaction. The Board left open any separate issue arising where tax had been itemised in a quotation at a stated rate.
6. Lord Wilson and Lord Carnwath dissented. They would have treated the date of supply as decisive, relying on the statutory definition of taxable receipts, section 11(1)(b)(ii), customer recovery and anti-manipulation considerations.

• Privy Council: dismissed the Mauritius Revenue Authority’s appeal and upheld the decision below.
• Supreme Court of Mauritius: dismissed the Authority’s appeal and upheld the Assessment Review Committee’s decision.
• Assessment Review Committee: held that the applicable HRT rate was the rate prevailing when payment was received.